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

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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