How to Use this Blog

Four Uncorrelated Assets

1.)  Stocks

2.)  Long Term High Grade Corporate/Government Bonds

3.)  Short Term Notes (Cash)

4.)  Gold – Precious Metals Mining Companies

Four Assets Correlated to Four Economic Conditions

1.)  Prosperity

2.)  Deflation

3.)  Recession

4.)  Inflation

1.)  Prosperity: Stocks become a clear winner during conditions of increasing employment, rising wages tied to increasing productivity along with rising profits.  Junk bonds (they trade like stocks) are also winners in this environment despite their low quality; the economy is so good interest and principal payments are made – defaults are minimum – and a positive climate for refinancing.  High quality corporate/ government bonds are secondary winners as prosperity is noted for stable or slowly declining rates.  Gold is generally a loser in prosperity as inflation is minimized and investors seek higher returns in more traditional investments.

2.)  Deflation:  Deflation is the decease in the general price level of goods and services.  The Great Depression is a standout example of deflation.  The general cause is when excess debt is built up in the private sector that can no longer be increased and/or maintained resulting in massive bankruptcies.  This creates an environment of panic as businesses scramble to become profitable by firing employees and cutting hours of remaining workers.  In this deflationary episode interest rates decline, prices decline, and the almighty buck rises in value against softer currencies.

Long term high quality corporate bonds and long term U.S. government bonds are winners in this type of economy.  Stocks, gold, and junk bonds generally will fall in price along with interest rates on short term notes.

3.)  Recession:  For DYI's purposes recessions are a period of increasing interest rates engineered by the Federal Reserve in order to quell inflation by slowing down an over heating economy.  This condition is temporary as the economy will either adjust to the new economic environment bringing back prosperity or a deflationary period will begin.

High quality corporate/government bonds, stocks, gold, and junk bonds are all losers in this scenario. Short term notes and money market funds are clear winner as their principal value remains steady plus the interest income improves with increasing interest rates.

4.)  Inflation:  Too much money chasing too few goods.  When Federal government liabilities become onerous from financing of war(s) and/or social programs that are too great to be paid by taxation governments will resort to money creation to pay the remaining costs.  After WWII, Korea, Vietnam and the war on Poverty inflation began slowly prices increased relentlessly (despite high taxes) as government liabilities expanded.  When President Richard Nixon closed the gold window (1971) the last vestige of inflationary controls were removed with inflation peaking in the high teens only until Paul Volker was appointed as Fed Chairman (August 79) who crushed inflation with high interest rates.

Stocks, high quality long term corporate/government bonds, junk bonds are all losers as inflation soars along with interest rate increases (despite the Fed's efforts to suppress them).  Cash (money market funds) or short term notes are neutral or slightly lag inflation rolling up to the higher interest rate quickly.

Gold is a winner when inflation breaks above 5%.  When inflation goes double digit gold is marked up in price to reflect the debasement of the currency.  Gold will also rise in price based upon fear of massive defaults as gold has no counter party risk.

 VALUATIONS DO MATTER

This investment approach is an offshoot of Harry Browne's Permanent Portfolio that maintains a fixed 25% invested in the above four asset categories listed above.  Harry's uncorrelated assets at the time was ground breaking.  Today it is taken for granted.  As much as I was impressed with Harry's work it always made me uncomfortable to always own 25% in each asset. When valuations are at extreme lows a greater percentage is called for and conversely at historical nose bleed levels significantly less (or none).

DYI’s approach working through our four assets and determining with a measure of accuracy the percentage invested depending upon long term valuations.  This is done by calculating our averaging formula for each asset.

If all three assets - gold, stocks, long term bonds, cash is our default position - are at fair or average value then each of the categories will be at 25% of the portfolio just like Browne's Permanent Portfolio.  However as prices move up or down from their respective mean our averaging portfolio will make the adjustment enhancing the overall return.  

Will DYI outperform the market??

Our primary goal is to outperform the Permanent Portfolio first.  Outperform the market?  Maybe? DYI's intentions is a 6% real return - as opposed to Browne's 4% - into your pocket with low volatility as opposed to our fully invested stock market investor.  In closing each of these assets stocks, long term bonds, gold and cash, all have their their moment of fame or shame.  Value players reduce or eliminate the overvalued assets and increase the undervalued; simple as that!     

DYI

 

U.S.

Stocks

18% Foreign Ownership

When the Going gets Tough Hot Money Flees?

 

National Debt

123% Debt to GDP!

The bull market for bond prices rising and interest rates declining that started on 9-30-1981 at the nose bleed level of 15.84% for the 10 year U.S. Treasury bond ended 8-4-2020 at 0.52%!  Since then rates are moving upward in a saw tooth manner.  Please note rates will increase higher during times of economic growth but will decline to HIGHER LOWS during recessions.

Spending by Congress’ and Presidents continue to be out of control for a soon to be 3 decades with zero talk of any kind for fiscal responsibility.  This is forcing the Federal Reserve to monetize (digital printing) an increasing share of the deficits.  The Fed’s balance sheet currently sits with 6.5 trillion dollars of Treasury securities all bought with digital money printing.  If they hadn’t interest rates would be higher chocking off the economy.

There is always trade offs, this money printing is where the vast majority of your price increases are coming from.

The remaining price increases is due to a supply and demand imbalances from high oil prices that is seeping through to all product chains.  Also corporations are increasing prices even higher in anticipation of future inflation to maintain after inflation profit growth...

Till Next time!   

Formula Increased Gold from 28% to 35%...Bonds & Stocks No Change...Cash Dropped from 48% to 41%

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 7/1/26

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

41% - Cash -Short Term Bond Index - VBIRX

35% -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  .........41.72
Bond Rate....5.43%

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: 0.49(rounded)

As of  7-1-2026
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

7-1-2026
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.....41.72

Avg. PE10...........17.39

Core Bond Allocation:  143% 

% 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:  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

 

 Compound interest 

is the eighth wonder of the world.

Those who understand, earns interests ... Those who don't ... pays and pays and pays and pays and pays and pays and pays…

DYI:  Starting early and investing consistently is the pathway to financial success.  Staying out of debt completely along with an emergency fund keeping you out of debt is the necessary cousin to investing early.  Simply put there is no special hack, no free lunch, and certainly no magic wands.  It is this: Live way below your means, become debt free and stay debt free, emergency fund and invest constantly.

Will you miss out on some and possibly many enjoyments in life along the way?  I won’t lie to you.  The answer is yes along with missing out on emergencies that sends the more adventurous into the financial ICU ward!

Life is made up of harsh tradeoffs.  Live a life with the attitude that your days are short without a concern about your nonexistent future only to arrive at an older (or old age) attempting to live solely off of Social Security.  

Dr. Wojak Speaks

Drs. & Hospitals

 Hazardous to Health? 

Healthcare is the #1 Cause of Death 

The medical system’s own data admits it.

Dr. Wojak, M.D. May 26, 2026 The biggest threat to patient safety isn’t external disease—it’s the medical system itself. If you search for the “leading causes of death” in the United States, you will be directed to CDC data listing heart disease and cancer at the top—healthcare-related deaths aren’t even included on the list. But those statistics come from death certificates and ICD codes (International Classification of Diseases) that are structurally incapable of recording the massive number of deaths caused by the medical system. CDC’s leading causes of death in the U.S. (2024), with healthcare-related fatalities conspicuously absent. How the medical system launders the deaths it causes The CDC’s mortality statistics run on ICD codes that don’t properly track the medical system’s own failures. When a doctor or a pharmaceutical drug kills a patient, the cause is recorded as a biological endpoint—such as cardiac arrest or organ failure—and grouped under broader categories like heart disease or cancer, effectively erasing the medical system’s culpability in the death. The scale of this erasure is massive. A 2000 study in The American Journal of Medicine compared two federal databases and found a 34-fold difference: the FDA’s own reporting system captured many more adverse drug reactions than were recorded on official death certificates—and it is those dramatically lower death certificate numbers that feed the CDC’s mortality rankings. It’s a self-reinforcing feedback loop. The deaths the medical system causes inflate the very disease categories used to justify the treatments that caused them. When you move past the official death certificates and into the audits conducted by the system’s own researchers, you find that healthcare is the leading cause of death. Half a million deaths per year: the bare minimum The medical system kills at least half a million people in the United States every year—a figure derived from the system’s own data that represents only the absolute floor of a death toll that is, in reality, much larger. This figure is an extremely conservative synthesis of data published in the world’s most prestigious medical journals—including JAMA, The BMJ, and research from institutions like Johns Hopkins. This death toll is compiled from distinct, non-overlapping categories of harm—ranging from medical errors to adverse reactions from properly prescribed medication. The researchers behind these papers emphasize that these are conservative estimates, and that the true scale of mortality is much higher. I. Inpatient medical errors (>250,000 deaths per year) At least 250,000 patients in the United States die in the hospital setting every year due to medical errors.  These include errors of commission (harmful action), errors of omission (failing to provide necessary care), communication breakdowns (ineffective or missing information sharing), contextual errors (disregarding the patient’s life circumstances), and diagnostic errors (missed, delayed, or incorrect diagnoses). The benchmark for this 250,000+ figure is systemic mortality models, namely a 2016 Johns Hopkins study published in The BMJ, which calculated a rate of 251,454 deaths per year due to medical errors by meta-analyzing decades of patient safety research. This estimate is corroborated by a 2013 analysis in the Journal of Patient Safety, which identified objective clinical triggers—such as unplanned returns to the operating room or sudden cardiac arrest in low-risk patients. Critics will cite lowballed estimates for deaths due to medical errors, such as a 1999 Institute of Medicine (IOM) report (44,000–98,000 deaths) or a 2020 Yale meta-analysis (~22,000 deaths). These estimates are derived from physician reviews and an overly narrow threshold for establishing causation.  This physician-review model is prone to institutional bias and systematically underestimates deaths.  Doctors naturally want to protect their own profession, so reviewers typically default to blaming a patient’s illness for a death, even when a colleague’s error was the catalyst. By measuring only the most obvious, singular acts of negligence rather than the preventable failure of the entire hospital system, the physician-review model significantly underestimates the true death toll of inpatient care. Medical error—the third leading cause of death in the US (Makary and Daniel, 2016) II. Inpatient medication reactions (>125,000 deaths per year) Over 125,000 patients in the United States die in the hospital setting every year due to adverse reactions from pharmaceutical drugs that were properly prescribed and followed. This category is distinct from medical errors; these are not procedural mistakes, but deaths caused by the inherent toxicity and unpredictable pharmacology of drugs deemed “safe” for clinical use. The foundation for this death toll was first established by a 1998 JAMA meta-analysis (106,000 deaths) and further substantiated in 2013 by a paper in the Journal of Law, Medicine & Ethics, which calculated a baseline of 128,000 inpatient deaths per year. The researchers behind the 128,000 figure emphasized that this represents a significant undercount, noting that structural issues—like the FDA’s prioritization of rapid drug approval over long-term safety monitoring—leave tens of thousands of additional deaths unaccounted for. This death toll is compounded by the modern explosion of polypharmacy, where the standard of care increasingly involves prescribing multiple medications to manage the side effects of other medications.  With over a quarter of adults (87 million) in the U.S. now taking four or more prescription drugs daily, we have created a medical environment where the risk of fatal drug interactions has climbed dramatically—yet remains invisible to mortality monitoring systems. Institutional corruption of pharmaceuticals and the myth of safe and effective drugs (Light et al., 2013) III. Outpatient deaths (>100,000 deaths per year) The medical system’s least-measured—and likely largest—category of fatalities occurs outside hospital walls.  These deaths, at home or in nursing facilities, escape all oversight: no charts are reviewed, no root cause analyses are triggered, and no questions are asked about the role of medical intervention. No single paper cleanly isolates the outpatient death toll, but two assessments using the same cost-of-illness model, published decades apart, converge on the same order of magnitude. The original 1995 study estimated approximately 199,000 annual drug-related deaths in the outpatient setting—a figure later cited in a 2000 JAMA analysis of the U.S. health system. A 2018 update subsequently estimated a total of 275,689 deaths from non-optimized drug therapy in both inpatient and outpatient settings combined. Subtract the roughly 128,000 inpatient adverse drug reaction deaths documented in the previous section, and the residual—approximately 148,000 deaths per year—represents the drug-related death toll occurring outside the hospital setting. Both studies were authored by advocates for expanding clinical pharmacy services. These are not critiques of the pharmaceutical model; they are arguments for more medication management. Yet, by their own math, the outpatient death toll still comes out in the six figures. Is US Health Really the Best in the World? (Starfield, 2000) Many more deaths beyond the admitted numbers The half-million-plus deaths tallied above come from the medical system’s own published research—and even those authors admit their estimates are low. The NIH’s own StatPearls review concedes that only about 1% of serious adverse drug reactions are ever reported to federal regulators.  A Harvard study likewise found that less than 0.3% of adverse drug events are ever reported. But beyond these acknowledged gaps are entire categories of death that mainstream research will not touch at all—because acknowledging them would implicate core profit centers. These deaths are triple-laundered: excluded from clinical surveillance, miscoded on death certificates, and kept off the research agenda that determines what the public is allowed to know. Chemotherapy Chemotherapy is poison. The first chemotherapy drugs were derived from mustard gas—the infamous chemical warfare agent from World War II.  It damages tumors, yes, but also everything else.  When a cancer patient dies during or shortly after treatment, it's the chemo that likely killed them—but the death certificate will say cancer. Chemotherapy causes death in more than 25% of cancer patients (PharmaTimes, 2008) Vaccines The vaccine program operates under a liability shield and a cultural taboo that makes honest mortality accounting impossible.  Every case of “SIDS” (sudden infant death syndrome) should be investigated as a vaccine reaction—the temporal correlation is overwhelming. Beyond the childhood vaccine schedule, under which American children routinely receive upwards of 70 doses by age 18, the COVID vaccine rollout saw young, healthy people dropping dead from myocarditis and clotting disorders.  The system will never properly audit itself because vaccines are its sacred cow. Police Detective: 50% of Sudden Infant Deaths Happened Within 48 Hours of Vaccination—But No One Is Allowed to Say It (Children’s Health Defense, 2023) Psychiatric drugs Millions of Americans are kept on psychiatric drugs that damage the body in ways that accumulate over decades—weight gain, organ damage, heart problems—none of which gets attributed to the drugs. These medications can shorten lifespan by decades, but when a patient dies of heart failure at 45, the death certificate says heart disease. The drug they took for 20 years won’t be mentioned.  Psychiatry has constructed a feedback loop where the drugs cause deterioration, the deterioration is blamed on mental illness, and more drugs are prescribed. Use of antidepressant medication linked to substantial increase in risk of sudden cardiac death (European Society of Cardiology, 2025) Death by medical debt Medical bills are the leading cause of personal bankruptcy in the United States—and financial ruin is a major driver of suicide.  The medical system bankrupts people for the privilege of being poisoned.  When a man loses his home to cancer bills and puts a gun in his mouth, the death certificate says suicide. Medical debt as the leading cause of personal bankruptcy in the U.S. (Harvard Medical School, 2014) “Brain death” The “brain death” diagnosis is a conveyor belt to the organ transplant industry.  Patients with recoverable conditions are declared dead under protocols that prioritize organ viability over making sure the patient is actually dead. Once that declaration is made, the patient becomes inventory—and the ventilator is turned off on the transplant team's schedule. Doctors Were Preparing to Remove Their Organs. Then They Woke Up. (The New York Times, 2025) Abortion as “healthcare” Over a million pregnancies are terminated each year in the U.S. under the banner of healthcare. Whatever one’s position on the ethics, the body count is real. Institutional consensus: abortion is healthcare (Compilation of global and national medical bodies, 2026) Euthanasia Although euthanasia is not legal in the United States (yet), it's worth mentioning. Where it has been legalized, the eligibility criteria keep expanding. Euthanasia is now the fifth leading cause of death in Canada. Assisted dying now accounts for one in 20 Canada deaths (BBC, 2024) Death rates drop when doctors go on strike When confronted with the reality that the medical system is the number-one cause of death, people inevitably try to downplay it: “Yes, medicine is dangerous, but it saves far more people than it kills.” This hypothesis has been tested repeatedly across multiple countries.  The pattern is consistent: when doctors go on strike, death rates decline. In 1976, doctors in Los Angeles County went on strike for five weeks. A study published in Pub Med.