Ted Bauman has a bit of experience when it comes to money matters. The stock market has not been doing well lately. I am assuming that some of you have seen the news. According to Ted Bauman, the stock market consists of both a bull and bear. Right now the bull is running wild. According to Ted Bauman, the bull may be in your neighborhood without your knowledge. The bad news is that the bull is not going anywhere anytime soon.
What can be done? We ask Ted what he suggests could be the cause.
1) According to Ted, the stock market has always been grossly overvalued. We need to go back to using the average ratios, also known as CAPE. Returning to the CAPE method would require comparing the stock price to corporate earnings over a period of ten years. This shift would take some time to get used to because we have not used it in a while.
It might also have two dramatic effects. One, investors will realize they cannot get their investments back relying on dividends. Some investors might abandon initial investments for something more favorable which would be the second potential effect.
“Everything is subject to speculation at this point.”
2) Yield curves might get some recognition for once. The bond markets do not expect anything substantial to happen. Say a recession happens again. The S and P in the stock market could drop more than 25%. Spoiler alert: This impact is going to be felt dramatically if and when there is an actual impeachment in White House. Stay tuned!
3) Ted also speculates there could be a brisk rise and fall. Think of it in the vain of the “Rise and Fall of the Roman Empire.” The market will rise and then crash hard. There could be a recovery, but it will only be a partial one.
Ted has some great investment tips you can read too. You will find them in his newsletter online.
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