An Excellent Checklist

For the Next Main Stream Press

Possible Psy-O

llllll

Be

Prepared!

U.S. Economy continues to Decline! 

If you're over 50 and still working, there's a statistic you need to know: 56% of workers your age will lose their jobs involuntarily before they planned to retire.

Not because of performance. Not because they wanted to leave. But because of layoffs, health issues, caregiving responsibilities, or age discrimination that's rarely called what it is.

And here's what makes this truly devastating: Most people in this situation never fully recover their previous income level. They end up taking lower-paying jobs, retiring earlier than planned with less saved, or scrambling to figure out what's next.

This isn't meant to scare you. It's meant to wake you up.

Because if there's even a chance you could be in that 56%, you'll need a backup plan that isn't "hope this doesn't happen to me."

Why this is happening (and why it's getting worse)

The financial reality most people face after involuntary job loss.

Why traditional retirement planning doesn't prepare you for this.

What you can build NOW while you still have income and time.

The best time to build a safety net is before you need one. And the second best time is right now.

Yields Drop...Gold Remains Firm...DYI's Cash Positions SOARS!...Stocks Overvalued!

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 3/1/26

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

57% - Cash -Short Term Bond Index - VBIRX

22% -Gold- Global Capital Cycles Fund - VGPMX **

 21% -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  .........40.00
Bond Rate...5.21%

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  3-1-2026
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

3-1-2026
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.....40.00

Avg. PE10...........17.34

Core Bond Allocation:  137% 

% 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

Current Market Environment...World Wide Inflation!???

 

333%

Global Debt to Global GDP

Continues to Grow Higher!

The 9-11 Psy-Op continues to this Day. No one Died; Buildings Collapsed by Controlled Demolitions!

 

Long Term Bonds

Bear Market Continues!

The bond buying opportunity of a lifetime with the 10 year Treasury bond interest rate peaking at 15.84% on 9-30-1981 and then declining to 0.52% on 8-4-2020.  This bull market lasted for 38 years, 10 months, and 5 days (or 14,188 days).

What to expect??  

As chief cook and bottle washer for this blog IMO we’ll experience over the coming years and very possibly the coming next two decades is ever rising interest rates all made possible by the inflation genie let out of the bottle.  These changes in rates will move through the economic cycles with rising rates during growth years and during recession rates declining at higher lows.  

Expectation:

Higher highs and higher lows.

Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope -  F

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

Smart Money - Buys the Dips!

Optimism - Swiss Treasury Securities and Silver 

Media Attention 

Enthusiasm - Gold

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks 

Denial of Problem   -BitCoin 

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 

Up to Date

Performance Derby

Massive

Over Valuation!

 

Gold to Dow Ratio: When is Gold Overvalued or Undervalued? 

When to Sell?

What is the fair price of gold at this point in time? One way to find out is to compare gold to other asset classes. Be it stocks, real estate, bonds or other major asset classes. Such a comparison will help you understand whether gold is overvalued or undervalued at a given point in time.

In the following article, we will look at one metric, which is the ratio of the US Dow Jones stock index to the price of an ounce of gold.

While the “fair prices” of stocks and bonds can be calculated using cash flow models created by economists, the situation is a little more complicated for gold. Since gold does not generate cash flows (such as dividends or interest) and is primarily a reserve asset that retains its value over the long term, other indicators must be used to analyze the price level.

The prices of various assets measured in gold are very suitable, because in this case, fluctuations in the value of the currency are excluded from the formula. In today’s monetary system, the prices of essentially all assets increase in the long term, because money creation works in such a way that currency loses its value consistently and over the long term.

Therefore, it is worth comparing the assets themselves. For example, how many ounces of gold did the average home cost 50 years ago? How much gold does the average home cost today? These indicators provide a better overview of changes in the purchasing power of gold.

Today we look at how the US stock markets have fluctuated, measured in ounces of gold. The chart below shows the relationship between the Dow Jones index, which is a composite of 30 large companies, and gold. The Dow Jones 30 is one of the oldest and most well-known stock market indices. It tracks the movements of the shares of 30 large US companies. The index includes companies such as Apple, Coca-Cola, and Microsoft, among others.

Investors who exchanged their stocks for gold at the right moment (and vice versa in the previous cycle) were able to grow their assets by several dozen times.

The Dow-to-gold ratio reached its absolute low in January 1980, reaching 0.99. Perhaps for the first time in history, an ounce of gold cost more than one Dow share. Over the next 20 years, stocks rose in price almost 50 times (!) in terms of gold. This ended in early 2000, when the technology bubble in the US stock markets burst and gold began a years-long rapid rise. Investors who exchanged their stocks for gold at the right moment (and vice versa in the previous cycle) were able to grow their assets by several dozen times.

The ratio reached 6 by 2011, but then started to rise again because the massive money printing by central banks did not bring the big price increase that many had expected. Rather, this money found its way into the stock markets and boosted the prices of stocks. Gold entered a bear phase.

Looking at recent history, the ratio peaked in 2019. At that time, one Dow Jones share cost 20.5 ounces of gold. Today, it has fallen to 10.0 – the historical median level. Over the past few years, the ratio has fallen sharply due to the rapid rise in gold prices.

Judging by the ratio, gold is currently at its mean relative to stocks. However, I expect the ratio to decline further. It is worth considering exchanging gold for stocks if the ratio drops below 5. However, it is wise to do this in parts, not all at once. It is not worth liquidating the entire gold position at this level.

While a drop to 5 would mean that gold is somewhat overvalued relative to stocks, the ratio is likely to fall significantly lower than that. 

I believe we are currently in the early to mid-stages of a major bull cycle in precious metals, which could see the Dow Jones - to Gold Ratio in the 0.5-3 range in the future.

The current bull run for precious metals will be similar in scope to the 1970s, as the world continues to face stagflation (stagnant economic growth but high inflation). The world’s debt burden has risen above World War II levels, and deteriorating budgets mean that debt relief is likely to be achieved through currency dilution. This, in turn, means low productivity and high inflation – two key factors that characterize stagflation. This is an extremely favorable environment for the price of gold, as it is a traditional reserve asset that cannot be printed.

What could be the peak price of gold based on the ratio?

One could expect the ratio to fall significantly lower. Since the currency problems are actually even more serious than in the 1970s, the ratio could fall below 1. Given the current level of the Dow, this suggests a peak in the cycle for gold prices of $40,000-50,000 per ounce (the Dow is currently trading at 50,000).

Such a price target sounds absurd at the moment, but it must be taken into account that in such a case the price of gold would also be in a total bubble and extremely overvalued relative to stocks. Since the ratio reached 1-2 in both 1932 and 1980, it is not at all excluded that this time it will be the same. With such a low ratio, it probably makes sense to exchange the lion’s share of gold for other asset classes.

 

Bull Market

For Declining Interest Rates

Ended on August 4, 2020

DYI:  Over the coming years we'll experience increasing interest rates during growth and declining rates during recessions.  This will be a saw tooth ever increasing rates with higher highs and higher lows as our government once again inflates away our massive debt to GDP just as they did after WWII with interest rate peaking at 15.84% (10 year T-bond) on 9-30-1981.  DYI’s model portfolio reflects this with a large commitment to short term notes (2 to 3 year duration).

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 2/1/26

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

48% - Cash -Short Term Bond Index - VBIRX

25% -Gold- Global Capital Cycles Fund - VGPMX **

 27% -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.  

 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.

 American’s

Shifting to Pro-Labor?

The U.S. oscillates between pro-business and pro-labor within a multi-generational time line.  Today IMO we are currently at the apex for the pro-business cycle grinding away at the top earners until incomes are once again flowing into the hands of the common man and women.  This change will happen, however it will become nasty and very possibly violent as the masses demand a greater amount of the national income pie.

This economic and social event is of historical level as the so called elites attempt to quell (from their point of view) this growing surge of discontent.  This was highlight by none other than the poster child of pro-business Larry Fink of Black Rock at Davos.  Lena Petrova of World Affairs her video is mislabeled stating CAPITALISM Is COLLAPSING — BlackRock CEO Larry Fink Just Said The Quiet Part Out Loud.  Capitalism is not collapsing it is simply a move by the masses for a more pro-labor stance.