There have been many stock market crashes in history, however, most of the people on Wall Street feel the good times for the stock market will last forever. There is a growing number in the financial community who feel that stocks have run their course. Ted Bauman is one individual who is beginning to feel that there could be a stock market crash in the near future. While living abroad, he became an expert in low-risk investment strategies. He is an editor at Banyan Hill publishing. He currently writes three newsletters that have helped thousands of subscribers make smart financial decisions. Much of his career life has been helping the less fortunate. He took on many managerial roles in the nonprofit sector to help the poor with housing needs. He recently wrote about several market crash scenarios that could take place soon.
Ted Bauman feels strongly that the US stock market is one of the most overvalued stock markets in history. One of the main tools he uses to measure stock valuations is the CAPE ratio. The current reading is 32, which screams that the market is very overvalued. Ted Bauman notes that the dot.com bubble was the only time in history that the CAPE ratio showed a higher reading. Mr. Bauman is not alone in calling the stock market overvalued. He feels that there is a possibility that stocks could fall as much as seventy percent. The current bull market has had a few shaky trading days but still remains strong. It may not take much longer for other traders to all feel the market is overvalued, in which case stocks may fall to fair value.
Ted Bauman also uses October 1987 as another possible scenario to a stock market crash. It took place on a Monday and was the largest one day fall in the Dow Jones Industrial Average on a percentage basis in history. It would be the equivalent of stocks falling twenty percent. It is important for investors to remain calm during sudden crashes like this because stocks could immediately bounce back. Investors who did not panic in 1987 came out ahead at the end of the year.