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!!

 

The (Declining) Status of the US Dollar as Global Reserve Currency: Central Banks Diversify into other Currencies & Gold

by Wolf Richter • Jul 9, 2025 

The dollar’s status as dominant foreign exchange-reserve currency has been diminishing for years as central banks have been diversifying to other currencies and over the past three years massively into gold. The decline of the dollar has been slow and halting, a couple of steps forward, one step back, sometimes bigger steps, other times smaller steps, and it remains by far the dominant global reserve currency. But the long-term trend is clear – and this has significant long-term consequences for the US.

The share of USD-denominated foreign exchange reserves declined to 57.7% of total foreign exchange reserves in Q1, according to IMF’s data today. In Q3 2024, the dollar’s share had dropped to a 30-year low.

Why is the dollar’s status as global reserve currency important?

Central banks other than the Fed have purchased $6.7 trillion in dollar-denominated financial assets, largely US Treasury securities. This money flow into the US has helped the US fund its twin deficits – the huge trade deficit and the even huger budget deficit – and thereby has enabled the US to incur those two deficits.

The dollar status as the dominant reserve currency has been crucial for the US, it has enabled the US to live beyond its means. As that dominance declines slowly — two steps forward, one step back — all kinds of risks pile up ever so slowly, including the sustainability of the government deficits and the debt.

Charles Smith SubStack click HERE 

DYI:  Our debt pile up.  1st gear 1980; 2nd gear 2000; 3rd gear 2009; 4th gear 2020.

When the next recession hits will the Fed's push the panic button and push inflation into overdrive?  So far history says yes they will driving the U.S. economy back into the 20 year inflationary cycle of 1965 to 1985.  The current ploy for individual investors is not the return on your principal but the return of your principal after inflation!

I've added to my sentiment indicators Swiss Treasury Securities as another possible safe haven from the long term effects of U.S. inflation.

  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 

   

 Kennedy gutted FOIA offices months ago. Gee, I wonder why.

This lying scam artist now wants to see every American wearing a “wearable” aka “injectable” within 4 years and promotes the CDC’s quackcine schedule that he knows perfectly well is not safe and knows or ought to know is not needed.

RFK Jr. & HHS: still searching for records to support their measles & covid narratives

Christine Massey FOIs Jun 27 2025 Greetings and Best Wishes, Two and a half months after ordering (pgs 1/2), not "requesting”, all studies in the possession, custody or control of Robert F. Kennedy Jr. and/or the U.S. Department of Health and Human Services Office of the Secretary, authored by anyone, anywhere, ever: 1. - that scientifically prove/provide evidence of the existence of the alleged measles virus or SARS-COV-2, or 2. - that at least describe the purification of particles that are alleged to be either of said alleged viruses directly from bodily fluid/tissue/excrement of so-called "hosts", or 3. - wherein the purported "genome" of either alleged virus was found intact in the bodily fluid/tissue/excrement of a "host" (as opposed to fabricated in silico aka computer modelled), or 4. - that scientifically demonstrate contagion of the illness / symptoms that are alleged to be caused by either alleged virus, or 5. - wherein the accuracy of any test alleged to relate to either alleged virus was assessed in a valid manner, or 6. - wherein "measles" or "covid-19" was shown to be a distinct illness that can be clearly differentiated from other health conditions... ...a letter dated today, June 27, 2025, from Arianne M. Perkins acting as Director, Initial FOIA Requests, FOI/Privacy Acts Division (HHS Case No: 2025-100066-FOIA-OS, pg 4/5) states that: "The actual time needed to process your request will depend.... Our current workload is approximately 7000 cases." Kennedy gutted FOIA offices months ago. Gee, I wonder why. This lying scam artist now wants to see every American wearing a “wearable” aka “injectable” within 4 years and promotes the CDC’s quackcine schedule that he knows perfectly well is not safe and knows or ought to know is not needed. Life in prison. (Note: this information has been sent to ~200 people who work for “the state”, lamestream media, etc. at Canada, Isle of Man, England and the U.S., so that they cannot claim later that they did not know. It will also be sent to people who act in the Canadian “justice” system… that has falsely prosecuted people in relation to “germs”.) If you would like to support my efforts, please see the Paypal button that is near the bottom of my homepage. Recommended Germ/Contagion Reading/Viewing Who Holds the Real Power at HHS? - Kate Sugak Antibodies: Dr. Tom Cowan and Stefano Scoglio (R.I.P.) On The Fallacious Underpinnings Of Mainstream Antibody Theory Dr. Stefan Lanka on “Antibodies” and “Viruses”, part 3 - in DSalud Beyond the Hype: Real ID’s True Purpose Revealed - Dr. Andrew Kaufman Placebo vs Nocebo: The Battle for Your Body - Dr Sam Bailey The Syphilis Scam Part 3: Imitation Game - Mike Stone, viroLIEgy Dr. Tom Cowan highlights the illogic of virology by addressing recent critiques of the no-virus position Assisted Dying Part 3: A Real Palliative Care System? - Dawn Lester Why doctors HAVE TO SAY viruses exist - Jon Rappoport First Do Harm: The Hidden Epidemic of Doctor-Induced Deaths Iatrogenic Medical Death is the Top Killer in the World - Amandha Vollmer The “Virus” Deception: Case Studies in Pseudoscience - Part 1: The “Lipovirus” - Mike Stone, viroLIEgy Are Viruses a Scam? - Mark Gober on The Courage Contagion MSM’s Obsession with Me Continues... and it is Waking People Up to the Virus Hoax - Dr Sam Bailey Mike Wallach and the viral delusion on Conversations After Dark Lupus Unmasked: How the Medical Label Hides the Real Imbalance - Dr. Marizelle From Vaccine to  Paralysis - Kate Sugak Dawn of Discernment - Critical Thinking & Logic. Conversation with Dr Jordan Grant, Dawn Lester Official FOI Confessions/Evidence Confirm that Virology is Pseudoscience My notarized affidavit regarding the hundreds of freedom of information responses (FOIs) confirming the fraud and delusion of virology, with German and Greek translations: https://www.fluoridefreepeel.ca/affidavit-re-foi-and-fraud-and-delusion-of-virology Also at tinyurl.com/virus-affidavit Freedom of Information Responses reveal that health/science institutions around the world (225 and counting!) have no record of SARS-COV-2 (the alleged convid virus) isolation/purification, anywhere, ever: https://www.fluoridefreepeel.ca/fois-reveal-that-health-science-institutions-around-the-world-have-no-record-of-sars-cov-2-isolation-purification/ Excel file listing 225 institutions: https://www.fluoridefreepeel.ca/wp-content/uploads/2024/09/Institution-list-for-website.xlsx FOI responses re other imaginary “viruses” (HIV, avian influenza, HPV, influenza, measles, etc., etc., etc.): https://www.fluoridefreepeel.ca/fois-reveal-that-health-science-institutions-have-no-record-of-any-virus-having-been-isolated-purified-virology-isnt-a-science/ FOIs re secretive and unscientifically "mock infected" cells (aka invalid controls) and computer-model "viral genomes": https://www.fluoridefreepeel.ca/do-virologists-perform-valid-control-experiments-is-virology-a-science/ 3000+ pages of "virus" FOIs in 8 compilation pdfs: https://tinyurl.com/IsolationFOIs Failed freedom of Information responses re contagion: https://www.fluoridefreepeel.ca/freedom-of-information-responses-re-contagion/ Do health and science institutions have studies proving that bacteria CAUSE disease? https://www.fluoridefreepeel.ca/do-health-authorities-have-studies-proving-that-bacteria-cause-disease-lets-find-out-via-freedom-of-information/ Because "they" (HIV, influenza virus, HPV, measles virus, etc., etc., etc.) have never been shown to exist, clearly don't exist and virology isn't a science. For truth, freedom and sanity, Christine

 Why

Is

Dividend Yield Investor

Negative on U.S. Stocks??

The Chart Below Speaks the Truth!  

 Expected Net Worth

Are you on track to be a Balance Sheet Accumulator of Wealth?  To determine if you are, here are three simple levels Gold, Silver, or Bronze based upon your age and income.

Simply use our multiplier based upon your age times your three years average income.

These dollar amounts do NOT include housing values.

Example:  $50,000 average income and you are 40 years of age.  The Bronze level is 10% (.10) x 40 x $50,000 = $200,000 

Bronze Level [10%(.10) x Age] x Avg. Income = Expected Net Worth.

Silver Level   [20%(.20) x Age] x  Avg. Income = Expected Net Worth.

Gold Level     [30%(.30) x Age] x Avg. Income = Expected Net Worth.

Using our example of a 40 year old with an average income of $50,000 if he or she equals or exceeds $200,000 you would be comfortable in relationship to your income.  At the Silver Level this would equate to being Affluent $400,000 and the Gold Wealthy $600,000.

At the Bronze Level you will be comfortable plus Social Security in your old age.  You are on track to be way ahead of the average saver (which is almost saving nothing).

At the Silver Level Social Security is simply an add on to your income during your old age.  At this level your wealth is enough to displace the need for Social Security.

At the Gold Level early retirement (if you so desire) possibly in your early to mid 50's, this would depend upon your average level of income. 

The age old adage is so true; live below your means save and most importantly invest the difference. Stay away from personal debt, purchase a house at or less than 2.0 times your income (or the equivalent in monthly rent) purchase modest used car(s) for cash and you are on your way to financial freedom.

DYI

 Medical

Industrial Complex

Corruption Has No Limits! 

For the credential-worshipping nimrods and institutional bootlickers, even editors of the world’s most prestigious journals admit how thoroughly corrupt and dishonest the medical publishing industry has become.

 Here We Go Again

More Bubble Trouble!!

Monthly update little change from prior month. Stocks remain massively overvalued!

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 7/1/25

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

43% - Cash -Short Term Bond Index - VBIRX

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

 22% -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  .........37.83
Bond Rate...5.41%

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: 0.54(rounded)

As of  7-1-25
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

7-1-2025
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.....37.83

Avg. PE10...........17.25

Core Bond Allocation:  130% 

% 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