5 Investment quotes from Sir John Templeton.

“If you want to have a better performance than the crowd, you must do things differently from the crowd.”

“Invest at the point of maximum pessimism."

"The four most dangerous words in investing are ‘This time it’s different.’”

“If we become increasingly humble about how little we know, we may be more eager to search.” 

“Bull markets are born on pessimism, grown on skepticism, mature on optimism and die on euphoria”

"Invest at the point of maximum pessimism."

DYI Comments:  The precious metals mining companies stock prices have been decimated on average from peak to trough of around 75%. 

 You can't find a positive article (believe me I've looked) for this beleaguered industry.  Stock prices could very easily stay down in price and possibly drop further over the next year or two.  The true investor as compared to the closet speculator, as a gift from heaven, as it allows time to build a position by dollar cost averaging.

Currently today the DOW/GOLD Ratio is neither over or undervalued as it has now regressed back to it mean.  Both current and average DOW/GOLD Ratio are the same at 16 to 1.

For those of you who are new to this blog the formula is weighted taking you out proportionally greater above the mean, and putting you in proportionally greater below the mean for all three of our economically uncorrelated assets-Stocks, Lt. term bonds, Gold. Then multiplied times our max. allocation of 60%.  This is our governor so that under most normal times all three assets will be in play dictated by our formula.  Simply, there is a bull market somewhere and we will most likely find it within these three economically diametrically opposed asset categories(cash is our reserve for future bargains). 

  12-1-2015

GOLD
Updated Monthly

[100 x ( Curr. DG - Avg. DG / 2 ) ]

________________________________

(Avg. DG x 2 - Avg. DG /2)

Avg. Dow/Gold Ratio DG  16

Current Dow/Gold Ratio  16

% Allocation  33.3%

33.3% x 60 (max. allocation) = 20%

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION

Active Allocation Bands (Excluding Cash) 0% to 60%

80% - Cash -Short Term Bond Index - VBIRX

20% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks-  Total Stock Market Index Fund - VTSAX

[See Disclaimer]

Today due to central bank intervention on a massive scale stock and bond prices have been lifted to the heavens, so much so, our formula and rightfully so has "kick us out" of those markets.  This is illustrated by my secular sentiment indicator.

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms*Short Term Bonds
Depression MMF
Hope
Relief *Market returns to Mean* Gold

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* Long Term Bonds
Denial of Problem U.S. Stocks
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!
Capitulation

What is do I mean by secular?  Stocks peaked at max-optimism 1998-2000.  They bottomed from 1980 -1982.  That will give an insight as to a secular time frame.

As a side note find a positive article regarding money market funds or for that matter find any articles positive or negative.  Currently today based on DYI's four assets, cash (short term bonds or money market funds) are the most undervalued.  Don't despair.  I'm 61 years old and have been observing markets at the age of 16 and began investing at the age of 18 for a total of 46 years (61 - 16 + 1 = 46).  This will change.  When?  Sooner as opposed to later is the best I can do.

THE GREAT WAIT CONTINUES....

DYI