While many financial analysts remain optimistic about the bull market in US equities, others are beginning to feel nervous. Ted Bauman is an economist and a contributor for Banyan Hill Publishing who has always practiced a defensive approach to investing. He believes that investors who shoot for high returns off the bat tend to underperform the defensive investing style in the long run. The current US equity bull market is the longest in history and Mr. Bauman feels there are factors that will start to weigh down the equity market. Mr. Bauman has pointed to the Federal Reserve and their hawkish stance with interest rates. If the economy keeps showing decent economic data, interest rates could be as high as four percent by 2020. He believes that equities could fall earlier due to the ongoing trade war between the US and China.
If the market is going to go south, Ted Bauman advises individuals to be weighted in both stocks and bonds. Even if the equity market drops, there could be a sharp rebound in stock prices just like there was after the stock market crash of 1987. Investors who did not panic during the crash ended the year with a ten percent gain, whereas the investors who panicked and unloaded their positions took a loss. Ted Bauman believes that a financial portfolio is not complete unless an individual has some portion of their wealth in bonds. Many investors will ignore bonds completely and fail to understand the wisdom in holding bonds. Bonds can help protect a portfolio when stocks are doing miserably. They also pay interest and can be a great source of residual income.
Ted Bauman grew up in the US and emigrated to South Africa. He did work for Habitat for Humanity in areas such as the Caribbean. He spent many years in the nonprofit sector helping in housing projects for the poor. He has done extensive research for the United Nations and has had his work recognized in respectable journals around the world. His life experiences have led him to believe that society should look after the less fortunate. Some of his current work involves him writing about low-risk investment strategies so average people don’t lose their money and can preserve their wealth.