DYI

When the Day Arrives;

POPPING this BUBBLE

Economic Historians will ask

This Simple Question:

What were these people thinking??

Individuals who started out as investors have now become speculators purchasing future sales, earnings, and DYI’s most favorite dividends at ridiculous levels since 2018!  Let that sink in! 

Since 2018 the Shiller PE averaging in the low 30’s now graduating into the low 40’s!  Future returns since 2018 no doubt have been spectacular, for a dollar cost monthly averaging till today’s average annual return before inflation of 14.39%, after inflation a very respectful average annual return of 10.47%.

However (you knew that was coming) when this bubble pops and it will, (I simply have no idea when), there will be a trail of tears.  I’m expecting a decade plus roller coaster ride to the downside similar to the late 1960’s and most importantly the 1970’s along with a boat load of inflation! 

Very long term investors especially those drinking out of their sippy cups watching Barney on TV who continue to buy 100% all stock portfolio will do well upon reaching retirement.  Those 30 plus year olds will lose precious time as returns over the next two decades will be sub par at best barely out distancing inflation.

Is it possible for stocks to rocket upward from here (S&P 500 Shiller PE at 41.06)??  Anything is possible, however higher the Shiller PE purchases made then will experience lower future returns over the coming one to two decades out.

IMO (here it comes!) now is not the time to shoot for the stars!  Its time to keep one's feet firmly on the ground holding on to your gains.  Either by following my model portfolio or purchasing long term investment grade corporate bonds Vanguard - VBLTX (5.47%) or your closest comparison in your 401k, Roth IRA, Thrift Savings Plan etc.  Please note this is only for those who have many years (10+) ahead to average in your yield until stocks valuations once again become eligible for purchase.

Those who are nearing (10 years or less) or retired capture those gains either use my model portfolio or purchase The Permanent Portfolio symbol PRPFX that historically has very low downside action and does well in almost any market condition (however in long term stock market bull markets will underperform by 3%).  

All and all hold onto your head while everyone else is losing theirs!

Till Next time...

DYI