Government

Health Care Subsidies

Will this be the Death of our Economy?  

Straight from the Den of Thieves: 

Federal Subsidies. In 2023, federal subsidies for health insurance minus certain related payments made to the federal government are estimated to be $1.8 trillion, or 7.0 percent of gross domestic product (GDP). In CBO and JCT’s projections, those net subsidies grow substantially, reaching $3.3 trillion, or 8.3 percent of GDP, in 2033. Over the 2024–2033 period, the 10 years spanned by CBO’s current baseline projections, those subsidies total $25.0 trillion, distributed as follows:

• Medicare—$11.7 trillion (47 percent),
• Medicaid and the Children’s Health Insurance Program—$6.3 trillion (25 percent),
• Employment-based coverage—$5.3 trillion (21 percent),
• Coverage obtained through the marketplaces established by the Affordable Care Act or through the Basic Health Program—$1.1 trillion (4 percent), and
• Other federal subsidies—$0.6 trillion (2 percent).

link to cbo.gov

The sickness industrial complex costs more than Social Security.

These cost have been projected way before Boomer's began to retire as this single group is so huge it is like a snake that has swallowed an ostrich egg.  There is also no doubt that medicine in general has spiraled totally out of control and is in my opinion (and many others as well) into organized crime.  The COVID crime is the capstone event that has simply open the eyes of the public; not just to the costs but also to medications and procedures that are of dubious value if not outright fraud (snake oil salesmen!).

Boomer costs along with massive criminal involvement sky rocking costs dragging an anchor on the seabed floor slowing what anemic growth our economy can produce.

Till Next Time       

 Murphy’s Law

If Anything Can Go Wrong

IT WILL!

DYI:  Inventories continue to build as more and more builders are discounting and/or buying points (reducing the mortgage interest rate) to clear out their stable of homes.  I’ll keep an eye out to see if they are successful or caught once again with too much inventory just before the next recession thus worsening the economic downturn. 

Residential Housing

History Making Prices

DYI:  Talk to any young family attempting to purchase their first house as an insurmountable task as prices have spiked higher despite higher mortgage rates.  This one two punch is leaving more and more young couples behind in purchasing their first house.

There is no joy Rentville as those monthly costs have blasted skyward despite being significantly less than purchasing!  For those who purchased their home near the bottom of the Great Financial Crash (see chart below) many have gains in greater than $300,000 and some as high as $500,000!  I’ve advocated that they sell then invest those gains conservatively – [the U.S. stock market is vastly overvalued] - and use some of the proceeds to rent (if needed).    

The Early Bird

Gets the Great Retirement!

DYI:  The real moral of this chart is to convince young people to put as much into investments early even before purchasing a home.  The example from the chart is $5,000 per year for ten years instead put in $15,000 the first three years, then $10,000 the next two years and the remaining five years back to $5,000.  The difference is far greater especially due to the first three years at $15,000 with those extra years of compounding.

Easy to understand but for many either not emotionally ready for that commitment or simply unable to put in the extra money due to so many other debts, needless to say “you get my point!”  

 Housing

Bubble 2.0?

DYI:  No doubt for this chief cook and bottle washer of this blog my sentiment indicator for residential housing at max-optimism!  Prices are now so high those who purchase today will not have – IMO – an effective inflation hedge as years gone past. 

This is similar to gold way back when as gold topped out at $850 per ounce on January 21, 1980, which was a record high for the precious metal at the time.  From then on gold retreated despite inflation still in the system though at a far lesser rate when it bottomed out in the year 2000 at $274.50 per troy ounce.

I’m not going to go as far as the drop in gold from 1980 to the year 2000 is what is store for residential real estate; what I’m stating that over the next 10 and most likely 20 years interest rates will roller coaster to higher highs and higher lows thus subduing any price increases for existing or new homes.  Very possible – for those purchasing at todays prices – 20 years from now will likely underperform the rate of inflation.  In real terms – after inflation – the sale will be at a net loss in purchasing power. 

Disclaimer

Cult Stocks

DYI: Below is a list of the high flying “Cult Stocks” during this most recent era of stock market insanity.  For those of you who are speculators may wish when you believe the timing is right to short or purchase long dated puts.  This is way out of DYI’s wheel house of expertise and obviously not financial advice just simply passing on a list of whose valuations have left planet earth!

Company     PE     Yield    Symbol     Sector

NVIDIA         78      0.10%  NVDA     Technology

Amazon        45     0.00%   AMZN      Consumer

Tesla             70      0.00%   TSLA       Consumer

Broadcom    73      1.24%   AVGO      Technology

Eli Lilly          124     0.59%   LLY       Healthcare

Oracle            45      0.95%   ORCL     Technology

Costco           54       0.62%   COST     Consumer

Abbvie          68        3.01%   ABBV    Healthcare

Adobe           43        0.00%   ADBE    Technology

Disclaimer

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.

 Vitamin D

Hoax!

New Guidelines for Vitamin D

Pam Popper, President
Wellness Forum Health

In 2011, the Endocrine Society was one of the first organizations to endorse the vitamin D Hoax, which was invented by Michael Holick. He co-authored the Society’s Clinical Practice Guidelines, declaring no conflicts of interest in the article reporting these guidelines,[1] even though his book, The Vitamin D Solution, had been published just a few months prior, and he had worked as a consultant to Quest Diagnostics, which offers vitamin D tests, since 1979. In an interview, he said that industry funding "doesn’t influence me in terms of talking about the benefits of vitamin D."[2] Right, of course.

Holick’s conflicts were not limited to books and his relationship with Quest Labs. Between 2013 and 2017, he received money from drugmaker Sanofi-Aventis,[3] which makes vitamin D supplements.[4]

Endocrine Society Guidelines are important. They are used by hospitals, physicians, and commercial labs including Quest. Due to Holick’s influence, the Society adopted Holick’s view that vitamin D deficiency was widespread in all age groups, and therefore widespread testing should be implemented. The Society also increased the target goal from 20 ng/mm to 30 ng/ml, which served to label almost 80% of the American population as vitamin D deficient. By 2016, vitamin D testing was the fifth most common lab test that qualified for Medicare reimbursement.[5] And the goal for supplementation continued to increase, with some associations and doctors setting target plasma levels at 75-100 ng/ml. This resulted in the recommendation of higher and higher doses of vitamin D.

It did not take long for health professionals who are critical thinkers to determine that there was no widespread Vitamin D deficiency, that the tests were inaccurate, and that supplementation was not only useless, but sometimes harmful. In 2015, the US Preventive Services Task Force reported that there wasn’t enough evidence to recommend routine vitamin D screening. A 2015 article in the American Journal of Medicine stated that raising plasma levels of vitamin D to 50 ng/ml could increase the risk of death.[6]

For the last 12 years, I’ve covered the vitamin D issue, writing articles and creating workshops to educate people about the hoax. 

Vitamin D is NOT a vitamin; 

it’s a hormone. 

The medical definition of a vitamin is a substance that the body does not produce and must be consumed in food. Vitamin D is at best useless, and in higher doses can be harmful. Lower vitamin D levels are usually a result, not the cause of health conditions, which is why hundreds of studies showed that supplementation has no effect on the prevention of or recovery from any disease.

Finally, the Endocrine Society has partially corrected its error and now advises against routine screening and supplementation for most people. Holick was not an author of these guidelines, which include these statements:

"Based on the absence of supportive clinical trial evidence, the panel suggests against routine 25(OH)D testing in the absence of established indications."

"Further research is needed to determine optimal 25(OH)D levels for specific health benefits."[7]

Additionally, the Endocrine Society no longer endorses specific definitions of vitamin D sufficiency, insufficiency, and deficiency.

The response from many disciples of the vitamin D cult is typical: They are digging in their heels. Evidence does not matter, and the demonstration of ignorance is astounding. Peter Osborne, a diplomate with the American Clinical Board of Nutrition says, "I disagree with the guidelines. Vitamin D is an essential nutrient that plays a pivotal role in multiple functions in the body. It is one of the most common deficiencies we see in the clinic."[8]

The problem is that vitamin D is NOT a nutrient – it’s a hormone produced by the body in response to sunlight. Osborne starts with an incorrect foundation for his statements. Additionally, the only way to diagnose "deficiency" is to use inaccurate tests and guidelines set by the Endocrine Society, which is why the Society changed its recommendations.

The Vitamin D Hoax shows how easy it is for one conflicted doctor to create a multi-billion-dollar industry with almost no evidence in support. It was easy to get medical societies to go along, and almost all branches of medicine readily jumped on board. Now, it’s almost impossible to get advocates to give it up. 

The scariest part of this is that the Vitamin D Hoax is not an isolated event. This happens regularly in medicine. 

Consumers MUST learn to take control of their healthcare by becoming INFORMED.  

---

[1] Holick MF, Binkley NC, Bischoff-Ferrari HA et al. "Evaluation, Treatment, and Prevention of Vitamin D Deficienecy: an Endocrine Society Clinical Practice Guideline." J Clin Endocrin Metab 2011 Jul;96(7):1911-1930

[2] Liz Sabo. The Man Who Sold America On Vitamin D – and Profited In The Process. KFF News August 20 2018 https://kffhealthnews.org/news/how-michael-holick-sold-america-on-vitamin-d-and-profited/

[3] https://openpaymentsdata.cms.gov/

[4] https://www.campaignasia.com/article/case-study-sanofi-aventis-highlights-dark-secret-in-australia/277567

[5] https://oig.hhs.gov/reports/all/2017/medicare-payments-for-clinical-diagnostic-laboratory-tests-in-2016-year-3-of-baseline-data/

[6] Taylor CL, Thomas PR, Aloia JF, Millard PS, Rosen CJ. "Questions About Vitamin D for Primary Care Practice: Input From an NIH Conference." Am J Med 2015 Nov;128(11):1167-1170

[7] DeMay, MB, Pittas AG, Bikle DD et al. "Vitamin D for the Prevention of Disease: An Endocrine Society Clinical Practice Guideline." J Clin Endocrin Met 2024 Aug;109(8):1907-1947

[8] Sina McCullough. Vitamin D Dilemma: New Guidelines Flip the Script on Sunshine Supplements. Epoch Times Sep 9 2024 https://www.theepochtimes.com/health/vitamin-d-dilemma-new-guidelines-flip-the-script-on-sunshine-supplements-5678747

Monthly Update: Gold stand out value; Lt. Term bonds trading near their mean; Stocks remain in the valuation dog house!

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 11/1/24

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

34% - Cash -Short Term Bond Index - VBIRX

42% -Gold- Global Capital Cycles Fund - VGPMX **

 24% -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  .........36.30
Bond Rate...5.10%

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: 0.59(rounded)

As of  11-1-24
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

11-1-24
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.....36.30

Avg. PE10...........17.17

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

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.        

  

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

 Stock

Ownership

From

1950 to 1985

Bull – BEAR – Bull  

According to recent data from the Federal Reserve, around 58% of American households today own stocks, but the majority of stock market wealth is concentrated among the wealthiest households, with the top 10% holding approximately 93% of all household stock market wealth, meaning the bottom 90% of households hold only a small portion of total stock wealth.

When the bear shows himself once again this is what a secular downturn in stock prices looks like.  The late 1960's and 70's was a roller coaster ride to lower prices and overtime to vastly improved valuations so much so by the time stocks bottomed out in July of 1982 equities were on the-give-away-table!  This 17 year journey leaving investors totally disillusioned.  However those who understood valuations invested heavily during any roller coaster lows, spouting low PE's and high dividend yields that would explode to the upside once we moved from the secular bear to the secular bull!

We're a long way from stocks being on the give-away-table but you need to know what a bottoming looks like with valuations so robust you're a kid in a candy store wanting to buy everything while the remainder of the populist will only buy after prices have surged significantly!     

 

Financial

Warfare

1.)  Live way below your means!

Example:  If you can afford a Mercedes buy a Honda Accord.

The biggest killers is student loans, credit card debt, car/truck loans, home mortgages and God forbid medical bills.  We live in a debt nation so avoid it and/or payoff as soon as possible.    

Never have a mortgage greater than 2 times your gross income and finance with 15 year loan.  

If you want to have life where you can save and invest plus money for the extras never overpay for housing.  You will have to save for a few years but it well worth it as the savings in mortgage interest cost is staggering.  

Also with a 20% down you avoid private mortgage insurance (PMI is used for possible default) an expense far greater than just a nuisance.  Not an easy task with property prices moving upward at breath taking speed but well worth it in the end as you will have a smaller payment and a paid off house in 15 years (or less if you make extra payments).      

2.)  Increase your means!

Work on your career pushing for that next pay raise or promotion.  Early in your life have a part time job as well.

3.)  Avoid debt like a deadly disease!

Use your debit card exclusively only rarely use a credit card and when you do pay it off at light speed.  If investment returns are less than cost of your mortgage and/or student loans make additional payments.  Get rid of debt!   

4.)  Have excessive savings!

They say having 3 to 6 months of saving is good enough. That's BS!  Life will throw you more curve balls than a profession pitcher from your favorite team.  Put 6 months worth of savings into a high yielding savings account after that Vanguard has a short term bond fund - Vanguard Short-Term Investment-Grade Fund Investor Shares.  One or even two years worth of savings is not out of the question.  We live in a world of downsizing, mergers-buyouts, economic declines even hurricanes that floods out the Appalachian mountains of Ashville NC!   

5.)  Invest conservatively and consistently!

Don't try to go shoot for those mega returns look for the slow and stable returns defined as below average return upside, above average in flat markets and superior returns downside.  

My favorite is Vanguard Wellesley Income Fund Investor Shares since this moment 10-6-2024 stocks are massively overvalued, however the stock holdings in Wellesley Fund are not the high flyers of today they are the big dividend payers.  This fund holds approximately 35% stocks and 65% in bonds.  Their average PE for stocks is 19.6 using DYI's allocation formula that current PE is acceptable for 60% bonds and 40% stocks.  Wellesley meets that threshold.

6.)  Automate your savings

Most HR/Payroll departments will allow you to split your take home pay to two different checking/savings account.  Send a portion to build up your high yielding savings account (HYSA) once that is finished then set up an auto draft from your savings to vanguard into your short term bond fund.  Once that becomes too big call Vanguard and shift a portion to Wellesley or whatever fund depending on the valuations of the market.

Example:  Let's say your putting in $500 per month into your high yielding savings account straight in from your paycheck overtime you've achieved your 6 months emergency money.  Establish an account with Vanguard's short term bond fund and then auto-draft from your savings $250 per month.  Once you've passed the two year in savings once per year ( January is a good month) - [have your smart phone send you reminders] call Vanguard and transfer the excess from your short term fund into your long term stock or stock and bond fund.  Any excess from your HYSA send that money to your short term bond fund.

7.)  To 401k or not to 401k??

The vast majority of these plans have fee's that are way too high.  Most of their stocks funds has an expense ratio 2% plus and have additional fees to manage 401k structure.  Wellesley Income Fund expense ratio is 0.23% with no other fees of any type attached! Once you have $50,000 plus this shifts to Vanguard's Wellesley Admiral fund and drops the expense ratio to 0.16% and again no other fees of any type attached!

So...If your 401k is loaded with fees - and it most likely is - if your company has a match then invest up to that amount and no more.

Roth IRA set it up with Vanguard here is their link.  

Here is a video with the late Jack Bogle explaining the tyranny of compounding fees!  Click HERE

By the way I receive zero money from Vanguard it is simply my opinion that they are great ultra low cost providers. 

8.)  Be careful who you marry!

If you marry a spender you will end up working well into your 70's.  A bit out of my wheel house but I felt compelled to add this - as this dynamic happens way too often with couples.