Economist Ted Bauman believes that the best approach to investing is to adopt a low-risk approach. While many will think that this investment style is boring and can limit returns, Mr. Bauman argues that investors have historically made more money with a low-risk strategy than other methods. With the US stock market at record highs, now may be the time to heed his business advice. Mr. Bauman earned degrees in history and economics when he moved to South Africa. He spent many years working with those in need and feels that society should play its role to offer those at the bottom opportunities for a better life. After living abroad for over twenty years, he returned to the United States and is currently employed with Banyan Hill Publishing, where he is the editor of three newsletters, all of which are designed to aid his subscribers in making smart financial choices.
Ted Bauman currently feels that US equities are way overvalued. He uses an indicator called the CAPE ratio in order to come to this conclusion. As an investor who specializes in low risk strategies, he feels that an area for investors to investigate is Chinese equities. The trade war rhetoric between the Trump Administration and the Chinese government has been one factor that has caused stock prices in China to plummet. The Chinese Yuan has been devaluing ever since the trade war began and soon after Chinese stocks followed suit. The Shanghai Composite is down over eighteen percent this year. Economist Ted Bauman feels that Chinese stocks currently are safer than US stocks because they are extremely undervalued.
Bauman has recommended the iShares China Large-Cap ETF as a way for American investors to gain exposure to some cheaper Chinese companies.Ted Bauman gets discouraged from how often investors will go without diversifying into bonds. A way to lower risk in a financial portfolio is to have a proper weighting of stocks and bonds. Investors who hold bonds will receive interest payments, like receiving dividends. Ted Bauman does feel that stocks in the US could end up crashing, but he does not believe investors should panic and completely sell all their stocks. He feels a very wise plan of action is to seek undervalued investments and to rotate out of more overvalued investments.