Ted Bauman has been preaching caution regarding the US stock market because he feels the bull market is about to come to end. He is an advisor who feels comfortably applying low-risk investment strategies to profit in the markets. He feels that the US stock market could continue to rise but there are factors that will eventually kill the bull market.
Ted Bauman and many financial analysts agree that the US stock market needs to come to fair value. Mr. Ted Bauman utilizes a tool known as the CAPE ratio to measure whether a market is undervalued or overvalued. he ratio for the US stock market has a reading of thirty-two and the historical average is seventeen. This means that stocks would have to fall almost fifty percent to be considered fair value. Currently, most investors on Wall Street seem to be overlooking the overvaluation of US equities, but once most analysts come to Mr. Bauman’s conclusion, US equities could start to fall rather quickly.
Ted Bauman is also worried that increasing interest rates will eventually put an end to the bull market in US stocks. An environment of raising the interest rates may entice many investors to flee from the overvalued stock market into the safer bond market once interest rates become more appealing. Continuing to raise the interest rates are going to exert pressure on the global economy. There is so much debt in the financial system and increasing the interest rates make debt service an absolute burden. Many respected analysts are of the opinion that a fed funds rate of three percent is too much for the economy and Mr. Bauman believes that a four percent rate will surely end the bull market in US equities.
One issue that concerns Ted Bauman greatly is the current trade war between Cinna and the US. The Trump administration is playing tough with China and has imposed sections on Chinese exports. Ted Bauman feels that China has done very little to retaliate so far against the US. However, if the trade war does not end, he feels that the Chinese government may hurt US multinational corporations that rely on revenue from conducting business in China. This would hurt the share prices of these companies, many of which trade on the major stock exchanges.
About Ted Bauman: stocktwits.com/tedbauman