While most investors are still are eagerly awaiting even higher stock prices here in the US, there are other financial experts who believe that the bull market has run its course. Economist Ted Bauman has become rather bearish on the US stock market. Mr. Bauman feels that it is more important now to focus on wealth preservation and low-risk investing strategies. He has listed several reasons why he feels the bull market in the US is going to come to end.
Ted Bauman feels that interest rates are going to exert pressure on the US stock market. The Federal Reserve has been rather aggressive in its monetary policy by raising the fed funds rate and unwinding its balance sheet. Due to all the debt in the financial system, many financial experts believe the US economy cannot handle interest rates over three percent. Ted Bauman also feels that ongoing trade war with China and the Trump Administration could be the catalyst to end the bull market in US equities. The Trump Administration has placed tariffs on Chinese goods and the Chinese government has responded with its own tariffs. Mr. Bauman pointed out that China could easily retaliate against US multinational companies that earn revenue from doing business with China. This lost revenue would eventually cause the profits of these companies to drop substantially, eventually resulting in lower share prices.
Even if the bull market in US stocks were to end, Ted Bauman does not advise investors to ditch stocks completely because they could rebound rather quickly, like the 1987 market crash. Although he is against the trade war between the two largest economies, he feels that the trade war has now created an opportunity for investors to sell some overvalued American equities for undervalued Chinese shares. China’s currency depreciated at a quick pace after trade war tensions began. Soon after the yuan depreciated, the Shanghai Composite started to fall and is down for year around twenty percent. Ted Bauman also feels that investors should not neglect to have bonds in financial portfolio, as this could be a great cushion for investors if US stocks fall.
Ted Bauman’s Twitter