There are many financial advisors who believe that US equities are overvalued. Most metrics used to measure stocks will show that the US market is more overvalued now than any other time in history, including the tech boom in the late 1990’s. Now may be time for investors to seek areas that may offer value without the substantial risk. Ted Bauman is an economist who feels that the US equities market may crash. He believes that investors who adopt a low-risk investment strategy will make greater profits than higher-risk strategies in the long term. Mr. Bauman has had much of his written work published in respected journals across the world. He currently works at Banyan Hill Publishing where he offers advice on how to make proper investing decisions.
Ted Bauman believes that the trade war has created a buying opportunity in some of the largest publicly traded companies in China. He advised his subscribers to investigate the iShares China Large-Cap ETF. The companies in the ETF had a price-to-earnings ratio under three, which represents that an asset is extremely undervalued. These stocks had not been this cheap since right after the 2008 financial crisis. The Shanghai Composite is down almost twenty percent for the year, yet the US market is extremely overvalued in comparison. Ted Bauman admits that it is possible that US stocks could climb a little higher but that would involve more risk than rotating into equities with much more favorable valuations.
As a man who preaches low-risk investing strategies, Ted Bauman urges investors to have a proper balance of stocks and bonds in one’s financial portfolio. He feels that investors tend to overlook bonds and will get too caught up in the stock market. Bonds are a great hedge if there is a stock market crash. Mr. Bauman is currently giving it a fifty percent chance of a stock market crash, so bonds are a wise tool for investors. Bonds are interest-bearing assets and can provide residual income for investors. Although he is cautious about US stocks, Ted Bauman feels that it is never wise for a finance investor to completely abandon all stocks.