S&P 500

183%

Above Fair Value!

"Madness is something rare in individuals — but in groups, parties, peoples, and ages, it is the rule,” Friedrich Nietzsche.

Is it Better to Buy or Rent??

DYI’s Price to Rent Ratio

Guide Post! 

The price-to-rent ratio is a metric used to assess whether it's more financially beneficial to buy or rent a property. It's calculated by dividing the median home price by the median annual rent in a specific area. A lower ratio generally indicates that buying is more affordable, while a higher ratio suggests renting might be more cost-effective.

Calculation:

Price-to-Rent Ratio = Median Home Price / Median Annual Rent

Interpretation:

Super Low Ratio (e.g., below 5)  Once in a lifetime purchase with costs significantly lower than renting (the Great Recession [2010 to 2012 or 2020 -2021 COVID scam])

Ultra Low Ratio (e.g., below 10)  Buying a home is definitely more affordable.   

Low Ratio (e.g., below 15): Buying a home is likely more affordable than renting.

Moderate Ratio (e.g., 16-20): The decision to buy or rent is less clear-cut and may depend on individual circumstances.

High Ratio (e.g., above 21): Renting is generally more cost-effective.

Ultra High Ratio (e.g. above 25):  Selling and renting becomes a very viable option.

Super High Ratio (e.g. above 30)  Selling is a given and renting is the obvious choice.

Mania High Ratio (e.g. above 40)  Sell pocket the massive gain and rent a nice place with lots of money left over!

Real Estate Investors Rental Properties Gross (before expenses) Yields at Purchase Price to Possible Rents:

Gross Returns:

5 to 1  =  20%

10 to 1 = 10%

15 to 1 = 6.66%

20 to 1 = 5.00%

25 to 1 = 4.00%

30 to 1 = 3.33%

40 to 1 = 2.50%  

The latest Performance Derby Since the Year 2000...Utilities have outperformed the Dow!

 From High to Low - Since Year 2000

+1037.2%  Gold

+419.1%  NASDAQ

+418.8%  Transports

+331.5%  S&P 500

+288.6%  Utilities

+283.8%  Dow

+170.5%  Oil

+94.0%  Swiss Franc’s

+24.7%  30yr Treasury Bonds

December 1999 Shiller PE10 was 44.19               
August 2000 S&P 500 dividend yield was 1.11%  

Shiller PE10 8-1-25 is 38.66  124% above its mean (17.26) since 1871.

S&P 500 dividend yield 8-1-25 is 1.22%  71% below its mean (4.23%) since 1871.

[Shiller PE10 & dividend yield is reported using data from the beginning or end of the month when I update.  It may or may not exactly be the first or last trading day of the month.]

8-1-25

S&P 500 Stock-earnings yield 2.59%

Bond rate 5.39%

Stock-earnings yield/bond yield = 48% of  present bond yield.

Dividend yield/bond yield = 23% of the present bond yield.

*Measured by valuations.  Year 2000 Shiller PE peaked at 44.19 with a scant S&P 500 dividend yield at 1.11%.  This high Shiller PE or low dividend yield has not been surpassed since 1871.

Stock-earnings yield (December 1999) was 2.26%.  High grade corporate bonds were in the 7% range in abundance.  This would push my EYC ratio - [see Ben Graham's Corner] - to 0.36!  Anything below 0.50 is in crash alert range.    

***************************

It is easily seen in the year 2000 the Nasdaq was horribly overvalued and gold was on the give away table, such lopsided returns 25+ years later!

Sentiment Changes

Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope - Silver F

Relief *Market returns to Mean  - Short Term Notes & Bills or MMF

Smart Money - Buys the Dips!

Optimism - Swiss Treasury Securities  

Media Attention - Gold

Enthusiasm

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks -BitCoin 

Denial of Problem  

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 

End Non-Medical Vaccine Exemptions, AAP Says

— U.S. school-entry vaccination rates have fallen in recent years

by Jennifer Henderson, Enterprise & Investigative Writer, MedPage Today

July 28, 2025 • 3 min read

DYI:  Excuse making for a forced medical intervention.  Consent or be systematically eliminated from portions of our society.  Obviously reducing your ability for non consent.  Where does this end??  Will Statin drugs be mandated in our future?? 

Monthly Update: Gold is good value; Long term bonds at their mean; Stocks absurdly overvalued!

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 8/1/25

Active Allocation Bands (excluding cash) 0% to 50%

40% - Cash -Short Term Bond Index - VBIRX

35% -Gold- Global Capital Cycles Fund - VGPMX **

 25% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are domestic or international companies they believe will perform well during times of world wide stress or economic declines.

  

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]

Lump Sum any amount greater than yearly salary.

PE10  .........38.66
Bond Rate...5.39%

EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate

2.00+ Stocks on the give-away-table!

1.75+ Safe for large lump sums & DCA

1.30+ Safe for DCA

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

1.00 or less: Sell stocks - Purchase Bonds

0.50 or less:  Stock Market Crash Alert!  

Purchase 30 year Treasury Bonds! 

Current EYC Ratio: 0.53(rounded)

As of  8-1-25
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 is any dollar amount greater than one year salary.

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

%
Stocks & Bonds

Allocation Formula

8-1-2025
Updated Monthly

% Allocation = 100 x (Current PE10 – Avg. PE10 / 4)  /  (Avg.PE10 x 2 – Avg. PE10 / 2)]

Formula's answer determines bond allocation.

Current PE10.....38.66

Avg. PE10...........17.26

Core Bond Allocation:  133% 

% Stock Allocation     0% (rounded)
% Bond Allocation  100% (rounded)

Current Asset: Vanguard Short-Term

Investment Grade Bond Fund   

Logic behind this approach:

--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk. 

--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the mean, rather than from volatility. Many agree this is the key to value investing.  

Please note there is controversy regarding the divisor (Avg. PE10).  The average since 1881 as reported by Multpl.com is 16.70.  However, Larry Swedroe and others believe that using a revised Shiller P/E mean of 19.6 , the number since 1960 ( a 53-year period), reflects more modern accounting procedures.

DYI adheres to the long view where over time the legacy (prior 1959) values will be absorbed into the average.  Also it can be said with just as much vigor the last 25 years corporate America has been noted for accounting irregularities.  So....If you use the higher or lower number, or average them, you'll be within the guide posts of value.

Please note:  I changed the formula when the Shiller PE10 is trading at it's mean - stocks and bonds will be at 50% - 50% representing Ben Graham's Defensive investor starting point; only deviating from that norm as valuations rise or fall.

Current Allocation:

Vanguard Short Term Investment Grade Bond Fund

Possible Allocations to Bonds vs Stocks:

Bonds %

100%+  Vanguard Short Term Investment Grade Bond Fund 

99% to 65% Wellesley Income Fund

64% to 35% 1/2 Wellesley Income Fund - 1/2 Wellington Fund

34% to 20%  Equity Income Fund

19% to 0%  Vanguard Small-Cap Value Index Fund

  

DYI

This blog site is not a registered financial advisor, broker or securities dealer and The Dividend Yield Investor is not responsible for what you do with your money.

This site strives for the highest standards of accuracy; however ERRORS AND OMISSIONS ARE ACCEPTED!

The Dividend Yield Investor is a blog site for entertainment and educational purposes ONLY.

The Dividend Yield Investor shall not be held liable for any loss and/or damages from the information herein.

Use this site at your own risk.

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham

 Are the Feds Buying Junk Bonds??

 Has the Dam Burst

With Real Estate Prices

Going Downstream??

 

Forwarded this email? Subscribe here for more Repeat: Paedo-In-Chief Trump Is Not Coming To Save You Or 'The Children' When will the Trumpstein brigade get it into their heads all politics is theatre. All puppeticians are actors with skeletons in their cupboards - that’s how they get the job in the first place Gemma O’Doherty Jul 21 2025 The megatarded Magatards have been losing their minds over their Orange Messiah’s broken promise on the release of the Epstein files. It’s been painful to watch. I’m hoping that most of the fuss is faux outrage manufactured by the lamestream media to gaslight the dopes who still believe politics is real. Surely sentient people don’t actually swallow any of this junk? But clearly some still do, so we will have to spell it out for the slow learners once again. All politics in the West is theatre. All puppeticians are actors. There are no governments left. There is no media left. There are no courts left. The Jewish moneymen control the entire racket. Face it and move on. Trump is nothing more than an actor reading from a script. He has zero power. Like his fellow minion Musk, he is not a billionaire and never was. He is just a sleazy compromised television character playing a role. How could anyone who calls themselves ‘awake’ continue to support this disgusting criminal who pushed the Covid scam and vaccine poison on behalf of his handlers, killing and maiming potentially millions of Americans? The ‘Epstein Files’ psyop is another contrived media production written by twisted Jews and designed to demoralise Trump worshippers, keep them dumbed down and distracted. There is no secret list of elite paedophiles. They are all paedophiles once they rise to the top of the swamp, be it in politics, Hollyweird or media. It’s a rite of passage: they either have to participate or be willing to turn a blind eye. If you make it into the club, it means you have a closetful of skeletons. You don’t get in otherwise. Do you really think these creeps are going to let you in on what they get up to behind closed doors? But they want to keep you talking about it so that you stay focused on them and not the life you were supposed to live. It’s psychopatic manipulation 101. The longer you buy into the idea that politics is real and coming to save you, you are prolonging the agony for everyone. No (s)elected politician in the West is working for you. They exist merely to steal your wealth and take away your privacy and freedom. The theatre of politics thrives on dividing people, making them impotent and believing somebody else is going to sort out their lives. There is NO POLITICAL SAVIOUR coming to sort out this mess. Only we can, by being an army of one and living outside of their matrix as much as we can. It’s hard to believe there are still grown men who believe the retarded Trump assassination attempt was real. And they will swallow the next one hook, line and sinker as well. These same tools believe Pallywood is real, they are watching real bombs and not fireworks in Gaza and that the Pally flag cause is not funded by Mossad. When we are dealing with this level of wilful ignorance at this late stage, it’s hard to see a way back for them. It’s as if they can’t let go and face the reality that they have been fooled and lied to for years. It’s a form of deep Stockholm Syndrome aka Trauma-Bonded Mind Control. Their lack of confidence and humility is what keeps them clinging to the lie. As I have said relentlessly, anything that goes viral on the fakestream media, as this Epstein larp has done, is scripted and being used to manipulate you. The same people who pull Trumpstein’s strings pull the media’s strings and tell them what to write. When you turn to them for the latest updates on the psyop, you are feeding them instead of making them redundant letting them go out of business. The so-called alternative media are as bad if not worse and funded by the same Jewish pockets. If you take anything from this, take the following: Politics is fake. There is no left or right. There is no political saviour. The media are lying to you night and day. Walk away and stop believing in a fiction designed to weigh you down and wear you out. If you hear anyone in your ‘alternative truther media’ discussing the Esptein farce as if it is real, know that you are being scammed.

Overall, then, the stock market stands at the highest level of valuations in U.S. history, easily eclipsing the extremes of 1929 and 2000.

 

"It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." 

Mark Twain

When desire disagrees with judgment, there is a disease of the mind: and to make a man forget the past, and blind him to the future, is as easy as making him drunk. The impression of invincibility is disaster itself. The stronger the illusion, the greater the fall.”

– Barbara Tuchman, The March of Folly

The Impression of Invincibility

John P. Hussman, Ph.D.
President, Hussman Investment Trust

July 20, 2025

With our most reliable stock market valuation measures at the highest extremes in U.S. history, record negative readings on our most reliable “equity risk premium” gauge (estimated S&P 500 total returns vs. Treasury yields), and the narrowest junk bond risk premiums in history, it’s useful for investors to remember that a market crash is nothing but risk-aversion meeting a market that is not priced to tolerate risk.

My impression is that the exuberance of the moment is too strong for investors to care about history. As is true in every bubble, investors are undoubtedly convinced that we’re in a new era to which history doesn’t apply. Simply observe corporate profit margins, for example, and the fact that they haven’t eroded in years, and it’s natural to imagine that they’ve simply established permanent highs beyond all historical experience.

We’ve had two decades of “free money” – not only fiscal deficits, but monetary policy that – for much of the past decade – funded those deficits by flooding the economy with zero-interest cash, which also significantly reduced corporate interest costs. That’s where the record profits have come from. It’s not a theory. It’s an accounting identity.

Remember also that despite the emergence of the internet, smart phones, networking, cloud computing, and countless other technological breakthroughs in recent decades, S&P 500 revenues, corporate profits, and GDP have grown slower, not faster, than in the decades prior to 2000. We forget. In the exuberance of this moment, the S&P 500 information technology index is priced at valuations that embed, and now require, a permanently high plateau in profit margins and growth rates.

Sentiment Changes

 Blind Man’s

Bluff!

Are we in a new era of unstoppable security prices??

Or

Another history making bubble??

Sentiment Changes

Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope - Silver F

Relief *Market returns to Mean  - Short Term Notes & Bills or MMF

Smart Money - Buys the Dips!

Optimism - Swiss Treasury Securities  

Media Attention - Gold

Enthusiasm

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks -BitCoin 

Denial of Problem  

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 The High-Tech

Market Distortion

Waiting for the Year 2000 Market Redo!!

The top 10 companies in the S&P 500, as measured by market capitalization, represent approximately 38% of the index's total market capitalization.  This indicates a high degree of concentration within the index, as a relatively small number of companies account for a significant portion of its overall value.

NVIDIA (NVDA): $4.022 trillion.

Microsoft (MSFT): $3.740 trillion.

Apple (AAPL): $3.153 trillion.

Amazon (AMZN): $2.388 trillion.

Alphabet (Google) (GOOG): $2.192 trillion.

Meta Platforms (Facebook) (META): $1.804 trillion.

Broadcom (AVGO): $1.290 trillion.

Berkshire Hathaway (BRK-B): $1.026 trillion

Tesla (TSLA): $1.009 trillion.

JPMorgan Chase (JPM): $797.20 billion.

 

Inflation

Stocks versus Bonds

Has the inflation dragon retired to his cave with the latest annualized 2.7% increase?  So far the long end of the debt market hasn’t thrown in the towel with the bell weather 30 year Treasury bond breaking the current yield level of 5%.  Worries are abounding with inflation determined to remain along with budget deficits massively growing as far as the eye can see.   

If history is any guide the first sign of trouble in the equity markets the Federal Reserve will turn back into doves creating a floor instead of ceiling of 5% for the 30 Treasury bond.

What does all of this mean for long term investors??

DYI’s Earnings Yield Coverage Ratio - [EYC Ratio] as the stock market is close to my crash alert level under 0.50!  Today 7-16-2025 the Shiller PE stands at 38.03 and Vanguard’s Long-Term Investment-Grade Fund at 5.48% pushing the EYC Ratio to 0.53 any number below 0.50 it is a high probability bonds out performing stocks.

The S&P 500 index with its tiny dividend yield at 1.24% as compared to Vanguard’s Long-Term Investment Grade fund at 5.48% is a 342% difference in yield.  Shiller PE at 38 investors is not just expecting but demanding earnings growth way beyond anytime in history to maintain the expansion of equity prices.

Bottom line:  Long-Term high grade corporate bonds (reinvesting the interest) bought today go to sleep like Rip Van Winkle waking 10 years it is likely to outperform the S&P 500.  When DYI’s EYC Ratio drops below 0.50 (low 0.40 level) your probability is so high of outperformance the expression is “shooting fish in a barrel!”      

 Stocks

Remain Vastly

Overvalued! 

 2006

Do Over?

Overpriced & Overbuilt!!