Stock market crashes are rare, but pretty much inevitable. There have been about 24 crashes and Bear markets throughout American history. Volatility and unpredictability are hallmarks of the stock market. Few people have the much-needed experience and discerning eye to be able to make fact-based predictions grounded by historical precedent. Ted Bauman is one of those few people. Specializing in asset protection, privacy, and low risk investment strategies, Ted Bauman has made his living in finance for over 25 years. He studied economics in South Africa, earning a post-graduate degree in the field, after which he gained decades of experience in the non-profit sector. Currently, Bauman serves as the editor of The Bauman Letter, Plan B Club, and Alpha Stock Alert. Recently Bauman outlined 3 plausible scenarios and his investment predictions for a stock market crash.
1. When Stocks Are Overvalued…
The bigger they are the harder they fall. The old adage applies to the stock market, too. Few investors remember that stocks are overvalued. Even fewer people ever realized it to begin with. This means that if the market was to return to the average ratio there would be a drop in the market that would have a detrimental effect. Investors would realize they can’t recoup their investments with future dividends and would bail out in droves to find profits, but this could create a crash.
2. The Unexpected
According to Ted Bauman, bond markets don’t expect anything phenomenal to happen with the country’s economy over the next several years. An unexpected shift of major proportions could very well cause a crash. A recession, to say the least, is one of those unexpected shifts.
3. The Old Crash and Bounce
Ted Bauman also mentions the possibility of what is known as a crash and bounce. It’s when there is a quick drop in the market immediately followed by a quick recovery. You can see a similar effect when fighters are knocked down and get up too early. There’s usually a much more substantial and dramatic fall coming afterward. Ted Bauman suggests the best course of action is to wait it out instead of panicking and making rash decisions.
More Than A Grain of Salt
With over 25 years of his career expertise and postgraduate degrees in both economics and history, Ted Bauman is a man that understands his financial industry in ways most people do not. His insights and predictions are backed by historical evidence and should be taken seriously by any investor looking to protect themselves from a crash.