Although born in the United States, Ted Bauman studied history and economics in South Africa, which led to an experience of over two decades within a nonprofit sector. He was involved with helping impoverished families in developing countries receive affordable housing and to this date has helped over fourteen million people. With his knowledge on low risk investment strategies and amount of experience in the field, Ted Bauman has become qualified to accurately predict certain fluctuations within the stock market. According to article, he believes that there are three possible outcomes for the future of the stock market.
The first outcome is based on the CAPE ratio (Robert Shiller’s adjusted price-to-earnings ratio). This ratio provides a comparison of stock prices and company profits over a time span of a decade. With the ratio currently being near to its all-time historical high, Ted Bauman predicts that it would take a year, or even more for the market to return to its normal ratio. The second outcome involves the recognition of a yield curve. The constancy of low long-term interest rates will invoke bond markets to realize that the country’s economy is currently at a stand-still. However, a recession could cause the S&P 500 to drop by nearly over twenty-five percent. This is most likely to happen following a shift in the House and an impeachment.
The last outcome is that the stock market has the potential to crash, and then bounce back from the drop. However, the recovery would only be partial. This theory is based on an event which occurred in 1987 where one company suffered a one percentage drop; the biggest recorded in history for the company. For this to happen to our current economy, Ted Bauman says that the S&P 500 would have to decrease by eighteen percent. With these potential outcomes in mind, according to Ted one should always be financially and mentally prepared for such situations. This includes focusing on risk reduction, not panicking in the case of financial emergencies without prior knowledge, and investing in stocks that have low volatility.
Read more: http://www.talkmarkets.com/contributor/Ted-Bauman