Bubble

News!

Portions taken from Market Minute: 

The current valuation spike fits into a broader trend of "index concentration" that has been building for over a decade. The fact that the Q Ratio or Shiller PE has only been this high once before—during the 1999-2000 period—is a haunting precedent. During the Dot-com crash, the subsequent "normalization" resulted in a nearly 50% drop in the S&P 500 and a "lost decade" for equity returns. While the companies of 2026 are arguably more profitable and have stronger balance sheets than the "pets.com" era, the mathematical reality of high starting valuations remains: 

High entry prices almost always correlate with lower 10-year forward returns.

This event also highlights a growing rift in regulatory and policy implications. With the market so highly valued, the Federal Reserve finds itself in a difficult position. Any hawkish tilt to combat lingering inflation could trigger a valuation collapse, while a dovish stance might further fuel an unsustainable bubble. 

Historical comparisons to 1929 are frequently cited by bears, noting that while the economic "pipes" are different today, investor psychology and the mechanics of margin and leverage remain remarkably similar.

Furthermore, the ripple effects on global markets are profound. As the U.S. market reaches these "once-in-a-century" levels, capital is beginning to flow toward international markets that offer more reasonable valuations. European and emerging market indices are currently trading at a significant discount to the Shiller PE of the S&P 500, suggesting a potential multi-year shift in global asset allocation if the U.S. enters a period of stagnation or correction.

The ascent of the Shiller PE ratio to 40.58 is a historic milestone that signals extreme caution. For only the second time since the 1870s, the U.S. stock market is priced at a level that has historically preceded periods of poor returns and significant volatility. 

The key takeaway for investors is that the "easy money" of the AI-led rally has likely been made, and the market is now entering a phase where risk management is paramount.

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DYI's Model Portfolio

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 4/1/26

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

51% - Cash -Short Term Bond Index - VBIRX

25% -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.  

 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.

 

Long Term

Bond Yields

Out Competing Stocks?

The 30-year Treasury yield is now yielding 4.90%. Its been within spitting distance of 5% since mid-March.

Treasury yields are still relatively low in a historical context. It’s just the years of QE and interest-rate repression by the Fed have distorted everything. And now there’s inflation, quite a bit of it, well above the Fed’s target, and once again accelerating. So for the Fed buying long-term Treasury securities to push down long-term yields is off the table.

DYI:  Treasury borrowings as far as the eye can see all fueled by Congress and Presidents (no matter the political party) nonstop spending.  That’s the real core driver of inflation forcing the Federal Reserve to monetize an ever growing portion of debt not covered by taxation.  High oil prices (supply and demand imbalance) just simply acerbates the increased cost of living, acting as a tax upon the American public. 

As we go through growth and recessions expect higher highs for all types of debt – public or private – during growing economic times and most importantly higher lows during recessions.  Until Congress and President(s) find the new found religion and put action into reducing budget deficits’ we’ll continue to endure higher interest rates similar to the Great Bond Bear Market of 1946 to 1981.

Higher long term rates have already begun their pushing down of PE multiples as measured by the S&P 500 index.  The Shiller PE maxed out in January of 2026 at 40.58 and now has begun its roller coaster downward journey. 

Simply put long term bonds and especially long term investment grade corporate bonds due to their decline (higher yield) are becoming more attractive than stocks. 

Vanguard’s Long-Term Corporate Bond ETF (symbol VCLT) current yield (as of 4-23-2026) is 5.79% as compared to the S&P 500 index (symbol VOO) yield at 1.16%!  Broader the spread between yields, the more tempting for long term investors (institutional or individuals) to begin shifting a portion of their new dollars into Lt. Term Corporates.

DYI  

 

More

Medical Gas Lighting

From the Fake Main Stream Press!

One of humanity’s oldest and deadliest killers is staging a modern-day comeback.

The so-called “white plague” reclaimed its title as the world’s deadliest infectious disease in 2023 after being briefly overtaken by COVID-19 during the first three years of the pandemic.

And the US isn’t immune. While the country still has one of the lowest rates globally, cases have been climbing steadily since 2020 — reversing three decades of decline.

And on and on and on...Non stop medical gas lighting from the New York Post.  If doctors continue to stay quiet when obvious medical gas lighting is going on the trust between doctors and patients will slide further and further.  

Doctors are being seen (and rightfully so) as advocates for Big Pharma instead of their patients.

DYI        

 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 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

U.S. Stock Market Now in Crash Alert Range! MASSIVE OVERVALUATION!

 

POP

Goes the Market!

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  .........40.44
Bond Rate...5.40%

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: 0.50(rounded)

As of  4-18-2026
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

 

The Late Dick Russell

(1924 to 2015)

Rich Man, Poor Man

In the investment world the wealthy investor has one major advantage over the little guy, the stock market amateur and the neophyte trader.  The advantage that the wealthy investor enjoys is that HE DOESN'T NEED THE MARKETS.  I can't begin to tell you what a difference that makes, both in one's mental attitude and in the way one actually handles one's money.

The wealthy investor doesn't need the markets, because he already has all the income he needs.  He has money coming in via bonds, T-bills, money market funds, stocks and real estate.  In other words, the wealthy investor never feels pressured to "make money" in the market.

The wealthy investor is an expert on values.  When bonds are cheap and bond yields are irresistibly high, he buys bonds.  When stocks are on the bargain table and stock yields are attractive, he buys stocks. When real estate is a great value, he buys real estate. When great art or fine jewelry or gold is on the "give away" table, he buys art or diamonds or gold.

In other words, the wealthy investor puts his money where the great values are. And if no outstanding values are available; the wealthy investor waits.  He can afford to wait. He has money coming in daily, weekly, monthly.  The wealthy investor knows what he is looking for, and he doesn't mind waiting months or even years for his next investment (they call that patience).

What about the little guy?  This fellow always feels pressured to "make money." And in return he's always pressuring the market to "do something" for him.  But sadly, the market isn't interested.

When the little guy isn't buying stocks offering 1% or 2% yields, he's off to Las Vegas or Atlantic City trying to beat the house at roulette.  Or he's spending 20 bucks a week on lottery tickets, or he's "investing" in some crackpot scheme that his neighbor told him about (in strictest confidence, of course).

And because the little guy is trying to force the market to do something for him, he's a guaranteed loser.  The little guy doesn't understand values so he constantly overpays.  He doesn't comprehend the power of compounding; he doesn't understand money.  He's never heard the adage, "He who understands interest -- earns it.  He who doesn't understand interest – pays it." The little guy is the typical American, and he's deeply in debt.

The little guy is in hock up to his ears. As a result, he's always sweating.  Sweating to make payments on his house, refrigerator, car or lawn mower he's impatient, and he feels perpetually put upon.  He tells himself that he has to make money -- fast. And he dreams of those "big, juicy mega-bucks." In the end, the little guy wastes his money in the market, or he loses his money gambling, or he dribbles it away on senseless schemes.  In short, this "money-nerd" spends his life dashing up the financial down-escalator.

But here's the ironic part of it.  If, from the beginning, the little guy had adopted a strict policy of never spending more than he made, if he had taken his extra savings and compounded it in intelligent, income-producing securities, then in due time he'd have money coming in daily, weekly, monthly, just like the rich man. The little guy would have become a financial winner, instead of a pathetic loser. Because the little guy is trying to force the market to do something for him, he's a guaranteed loser."

Rule 1: COMPOUNDING...

Rule 2: DON'T LOSE MONEY:

This may sound naïve, but believe me it isn't.  If you want to be wealthy, you must not lose money, or I should say must not lose BIG money.  Absurd rule, silly rule?  Maybe, but MOST PEOPLE LOSE MONEY in disastrous investments, gambling, rotten business deals, greed, poor timing. Yes, after almost five decades of investing and talking to investors, I can tell you that most people definitely DO lose money, lose big time -- in the stock market, in options and futures, in real estate, in bad loans, in mindless gambling, and in their own business.

RULE 3: VALUES: The only time the average investor should stray outside the basic compounding system is when a given market offers outstanding value.  I judge an investment to be a great value when it offers (a) safety; (b) an attractive return; and (c) a good chance of appreciating in price.  At all other times, the compounding route is safer and probably a lot more profitable, at least in the long run."

-Richard Russell

DYI:  I attempted without luck to find when Richard Russell wrote these two observational letters, however I remember reading them on the internet during the mid 1990's.  My best guess they were written back in the 1980's and despite being at least 40 plus years old they are just as relevant today as they were back then.

What does Dick Russell mean by compounding?  

Short term bond funds, money market funds, CD's at the bank, Series E or I Savings Bonds, buying 2 or 5 year U.S. Treasury notes etc.  In other words buying safe and very boring interest bearing investment assets building a nest egg waiting patiently for the next on-the-give-away table investment.   

 

Friendly Reminder:

American Medical Association supported smoking long after it was linked to cancer.

“The American Medical Association was fully on board with smoking.”

“They were getting tobacco lobby money… 28 years after the evidence showed: 

"Smoking causes lung cancer.”

Dr. Wojak, M.D.

 

Stocks VS Bonds

DYI:  When changes in valuations become so absurd changes in asset allocation from the value players is ignored by the crowd as they continue purchasing overvalued assets (currently stocks).  The crowd today is totally fixated that stocks will always deliver their magical 10% return forever and yet has long since forgotten that bonds out performed stocks from the year 2000 till the end of 2009!   

Warren Buffett’s Berkshire Hathaway pulled in currently $360 billion in Treasury bills and notes (31%) the highest ever in its corporate history.  Completely ignored (except value players) by the crowd even the so called professionals we are suppose to bow to their expertise maintain a high percentage level in stocks!    

Today 3-31-2026 the Stock to Bond Index almost reached a 2 to 1 level that is far and above 1929, 1966, and the year 2000!  This is a scorching difference between the S&P 500 dividend yields of 1.09% as compared to long term corporate bonds yielding 5.90%!  Along with the S&P 500 Shiller PE remaining at the nose bleed level of 36.53 thus placing a governor for any upside potential.  Simply put the compounding effect – despite any interest rate gyrations – over the next ten years it is now highly likely corporate bonds will outperform stocks until valuations justify purchasing stocks.  

 

Medical Testing

Bubble?

Over-Reliance on Lab Tests Has Worsened Medical Practice Pam Popper, President Wellness Forum Health According to an article published in 2024, overuse of lab tests in hospital settings contributes to both the high cost of healthcare, and the mistreatment of patients. Consequences include hospital-induced anemia and other poor outcomes.[1] We’ve been telling our members for almost three decades now that this is the case and that the issue is not limited to hospital settings. There are several reasons for this, which include but are not limited to the expansion of testing – more and more measurement of more biomarkers; and also reference ranges which have become increasingly unreliable for many reasons.  In fact, according to an article posted on Medscape, "A truly exact range for laboratory values exists only theoretically."  This article also states that lab results are not just numbers to memorize, and that correct interpretation requires context, knowledge and clinical judgment.[2] In a perfect world, each lab is supposed to establish reference ranges for all biomarkers measured. This process involves testing at least 120 healthy people in each demographic group and using the middle 95%. The top and bottom 2.5% are excluded. But the world is not perfect, and many labs do not follow this process. Instead, they rely on reference ranges reported in medical journals and often adjust for differences, which can include differing analytical systems, methods, environmental factors (like lab water quality) and reagents. These differences can be quite significant, and attempts to harmonize have not worked with the exception of markers like cholesterol and hemoglobin A1c.[3] Additionally, so-called "expert panels" influence reference ranges too. In some cases, this makes sense. For example, in the U.S. the average BMI is 30. Applying the "central 95% standard" to this metric would mean that obesity would be considered "normal." An adjustment is clearly needed in this case. On the other hand expert panels, many of which are made up of highly conflicted professionals sponsored by Big Pharma, have changed reference ranges for biomarkers like blood pressure, cholesterol, and thyroid-stimulating hormone (TSH) so much that almost everyone can be diagnosed with something.  This is a process we call "disease mongering" and it benefits drug companies but almost never benefits patients.  Yet another issue is that lab results almost never consider age or sex. For example, prostate specific antigen increases with age, and increasing PSA levels may not signify cancer. And normal iron levels for women indicate anemia for men. Lab results are particularly irrelevant when measuring nutrient levels. In addition to the uncertainty of which of the thousands of nutrients you should be tested for, testing is not a very precise science. One of the reasons is that human biochemistry is complex, and values can vary from minute to minute. This means that a test performed at 10:00AM might yield different results than a test performed at 9:45AM. Fortunately the body is able to respond to this variability by practicing "selective absorption,"[4] extracting and absorbing exactly the nutrients needed from the foods consumed at any time. Once in the body, there’s even more variation as nutrients follow different pathways depending on the body’s needs at a particular time - energy vs cellular repair, for example. Sometimes lab values are just made up.  Perhaps the most egregious example of this is the billion-dollar industry that has developed around vitamin D status.  It’s not a vitamin, it’s a hormone.  There are no reliable testing methods.  There is no consensus as to what optimal plasma levels of vitamin D should be.  No one knows how much vitamin D a person needs to take to increase plasma levels. There is no proven connection between higher plasma vitamin D levels and better health outcomes.  Supplementation benefits very few people, and there are known harms that can result from taking vitamin D supplements. (see several referenced articles on this topic in the Health Briefs Library)  None of this seems to matter – those who have carved out their piece of this billion-dollar fraud are not about to give it up.    These points are not an argument for ignoring lab tests. They are necessary in many cases.  But it is an argument for clinical judgment instead of blind adherence to so-called "normal values" or fixed reference ranges that have changed in many cases due to industry influence.  It’s time to do less testing and more relationship building between health professionals and their patients. Humans are not machines and their bodies cannot be maintained and/or repaired based on universal norms and standards. [1] Shaik T, Mahmood R, Kanagala SG et al. "Lab testing overload: a comprehensive analysis of overutilization in hospital-based settings." Proc (Bayl Univ Med Cent) 2024 Feb;37(2):312-316 [2] Wolfgang Paik. When Leb Reference Values May Mislead Clinicians. Medscape March 10 2026 [3] Ceriotti F. "Harmonization Initiatives in Europe." EJIFCC 2016 Feb;27(1):23-29 [4] Cheraskin E, Ringsdorf WM. New Hope for Incurable Diseases  Exposition Press New York 1971 pp 24, 25, 4

S&P 500 Shiller PE 127% ABOVE its Average Shiller PE! U.S. Stocks are No Bargain!

 

What happens in a recession induced financial crisis?

Greed is quickly replaced by Fear.

Core survival instincts: The door slamming shut: Everything that was possible in the risk-on euphoria of greed; becomes impossible in the risk-off wilderness of fear.