Carrier Class

Ted Bauman: Common Sense Advice on Preserving Wealth

The sentiment among most investors regarding US equities remains bullish even though any metric used for valuing stocks is higher than almost any other time in history. Ted Bauman believes that it is possible that the stock market has run its course and there may be a decline. As an economist, he admits he doesn’t analyze individual stocks, but he tends to take a defensive strategy and preserve his wealth. Ted Bauman grew up and traveled to South Africa. He attended the University of Cape Town and majored in History and Economics. He has spent much of his life assisting those around the world who are less fortunate. He spent time with Habitat for Humanity. His professional career involved him overseeing housing projects for the poor. He returned to the United States and is the editor of the Bauman Letter. He now specializes in low-risk investing strategies with a long-term investing horizon.

Ted Bauman believes that with stock valuations at record highs, it is only a matter of time before equities revert to fair valuations. He advises individuals not to try to be market timers because when stocks decline, the process usually starts slow and it could be over a year before its noticeable. Once sentiment among investors reverses, no one will want to buy risky assets and they will all go to the exits. Ted Bauman believes that the Federal Reserve will continue to raise interest rates. If interest rates keep rising, this will attract more investors to place their money in treasuries and this could weigh down on the stock market.

Ted Bauman believes that investors should have a portion of their assets in bonds as well as stocks. He believes that there are too many individuals out there who only own stocks and have no exposure to bonds. Many individuals lack an understanding of bonds and tend to shy away from them. Bonds pay interest and can be used to receive residual income. Plus, bonds act as a cushion for an investors portfolio when there is trouble in the stock market. Mr. Bauman points out that it takes both bond and stocks to truly have a balanced portfolio and if the stock market goes south this defensive approach will certainly pay off.

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