DYI expects a 45% to 60% decline for the S&P 500. This is not market timing, or reading the tea leaves, or holding a seance, simply a ho hum, run of the mill, a typical bear market leaving a massive overvalued stock market!

Margin of Safety!

Central Concept of Investment for the purchase of Common Stocks.

"The danger to investors lies in concentrating their purchases in the upper levels of the market..."

Stocks compared to bonds:

Earnings Yield Coverage Ratio - [EYC Ratio]

EYC Ratio = [ (1/PE10) x 100] x 1.1] / Bond Rate

1.75 plus: Safe for large lump sums & DCA

1.30 plus: Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - rebalance portfolio - Re-think stock/bond allocation.

Current EYC Ratio: 1.08

As of 2-1-16
Updated Monthly

PE10 as report by Multpl.com

Bond Rate is the rate as reported by

Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)

DCA is Dollar Cost Averaging.
Lump Sum any amount greater than yearly salary.

PE10  .........24.56
Bond Rate...4.13%

Over a ten-year period the typical excess of stock earnings power over bond interest may aggregate 4/3 of the price paid. This figure is sufficient to provide a very real margin of safety--which, under favorable conditions, will prevent or minimize a loss......If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety.  The danger to investors lies in concentrating their purchases in the upper levels of the market.....

Common Sense Investing:

The Papers of Benjamin Graham

Benjamin Graham

DYI Comments: Retirement plans 401k's, Roth IRA's, 403b's etc. dollar cost averaging is not recommended as undoubtedly be concentrating your purchases in the upper level of the market...your returns for dollars invested today will be dismal at best(around 2% nominal) and most likely will be negative(real after all costs) over the next 10 years.

Estimated 10yr return on Stocks

Using 5.4% as the historical growth rate of dividends and 4.0% as the ending yield.

Starting Yield*---------return**
1.0%-----------------------(-5.7%)
1.5%-----------------------(-1.7%) 

2.0%------------------------1.3%
2.27% You are Here!                     

2.5%------------------------3.8%

3.0%------------------------5.9%
3.5%------------------------7.8%
4.0%------------------------9.4%
4.5%-----------------------10.9%

5.0%-----------------------12.3%
5.5%-----------------------13.6%
6.0%-----------------------14.8%
6.5%-----------------------15.9%

7.0%-----------------------17.0%
7.5%-----------------------18.0%
8.0%-----------------------19.0%

*Starting dividend yield of the S&P 500-**10yr estimated average annual rate of return.

World wide central banks with sub atomic low interest rates and endless QE has not improved the real economy only to blow world wide markets back into bubble land.  To state the obvious, this will not end well!  DYI expects a 45% to 60% decline for the S&P 500.  This is not market timing, or reading the tea leaves, or holding a seance, simply a ho hum, run of the mill, a typical bear market leaving a massive overvalued stock market!

Hold onto your hats were in for a wild ride!

DYI