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 the 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 professional pitcher from your favorite team.  3 months in checking; 3 months in high yielding savings account; 6 to 18 months worth of savings in an account with Vanguard's short term bond fund - Vanguard Short-Term Investment-Grade Fund Investor Shares. 

One or even two year’s worth of savings is not out of the question.  We live in a world of downsizing, mergers-buyouts, economic declines even hurricanes that flood 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 favorites:

The Permanent Portfolio Fund

This all economic season fund is the brain child of the late Harry Browne (all of his ideas surround this blog) with a fixed asset allocation shown below.

 Target Portfolio Structure:

•   20% - Gold
•   5% - Silver 
•   10% - Swiss Franc Assets 
•   15%- Real Estate and Natural Resources 
•   15% - Aggressive Growth Stocks
•   35% -Dollar Assets

Vanguard Wellesley Income Fund Investor Shares 

At this moment 11-5-2026 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.  

6.)  Automate your savings

Almost all 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 auto-draft from your savings $250 per month.  

Once you've passed the two years 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 bond fund into your long term stock/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 this shifts automatically 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.  

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.

 

Growing

Awareness!

The streets of France, Germany, Poland, Spain, Ireland, and other countries, and it is boiling here, too, with anger growing, and not just against Trump. Both sides are trying to demonize the other side in the run-up to the elections, but people have had it with both parties. Almost no one is left that is stupid enough to cast a protest vote against Trump by voting for the Dems.

Surely no real person believes Socialism is going to solve this?

What do you think they are revolting against in Europe? They have planted actors/spokesmen on the streets to make you think the revolts over there are coming from the left, but they aren't. They’re not coming from the right, either, though that is nearer the truth. People are fed up with the manufactured divisions and lies from all sides, and are coming to realize this has nothing to do with Socialism or Capitalism.

It has to do with the predatory class that has taken over the world, becoming ever more virulent in the past 50 years.

It is institutionalized theft by the governments of the world to feed the very rich people running them.

That isn't a political or economic problem; it is amoral and legal one. These thieves have to be routed and replaced with honest folk, if any can still be found.

From the desk of Miles Mathis click HERE for his entire post.  I’ve truncated a small portion from his most enlighten article.

Till Next Time

Will value stocks outperform growth stocks in the near future? Very possibly!

 

November 2026

Growth Stocks

VS

Value Stocks

Current underperformer: Value

DYI:  Here is a method for individuals with a high volatility tolerance (especially downside).  If you're young enough with at least 2 decades and 3 is preferred; obviously in the accumulation stage of life.

Two Vanguard Funds:

1.) Growth Index Fund VIGAX

5 year return 10.78%...10 year return 17.57%

2.) Value Index Fund VVIAX

5 year return 12.43%...10 year return 13.01%

(Vanguard 500 Index Fund Admiral Shares

VFIAX...5 YEAR RETURN 12.02%...10 YEAR RETURN 15.40%)

The accumulation of savings is in the fund that is UNDERPERFORMING!   When your underperforming fund (compare 5 and 10 year returns) becomes the new winner you now direct your savings into the old winner neither fund is ever sold.  That’s it!

Whether or not this method will outperform the S&P 500 index is unknown, however it does make common sense buying the bargain as compared between the two funds – growth vs value.

Till Next Time 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 11/1/26

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

43% - Cash -Short Term Bond Index - VBIRX****

35% -Gold- Global Capital Cycles Fund - VGPMX **

 22% -Lt. Bonds- Long Term Bond Index - VBLAX

 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.

****Many followers of DYI substitute the short term bond fund for the Permanent Portfolio Fund symbol PRPFX.  An excellent idea to add a bit of extra return when these asset categories drop into their respective undervaluation.

 

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  .........40.13
Bond Rate....6.10%

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: 0.45(rounded)

As of  11-1-2026
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

11-1-2026
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.....40.13

Avg. PE10...........17.44

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:  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  

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham

Updated

Monthly

November 1, 2026

100 x (CP - AVG. AP ÷ 4) ÷ (AVG. AP x 2 - AVG. AP ÷ 2)]

 CP = Current Oil Price

AVG. OP = Average Oil Price

Answer is for bond percentage level

West Texas Intermediate Oil:  

Current Price (CP) - July 1, 2025  $103.00

Average Inflation Adjusted Price (AP) - $64 (rounded) since 1946

Asset Allocation: 

9% Vanguard Energy Fund 

Symbol VGENX

91%  Vanguard Short-Term Bond Index Fund 

Symbol VBIRX

 

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.

DYI’s

An Asset Discussion!

U.S. Stocks: 

Making the statement that equities being overvalued is a massive understatement.  Valuations today are the highest they’ve ever been in history!  The chart below let’s one know the downside risk today is significantly greater than any remaining upside.

Investment Grade Long Term Bonds: 

Yields today despite all of the ongoing hoopla are now trading at their average since 1871!  Now that the U.S. has ended their sub atomically low yields investors have a reasonable chance to increase their wealth through compounding.  This is especially true for those with a minimum of 10 years (20 years is better) before the money is needed to dollar cost average into your favorite long term investment grade bond fund.

However for those with lump sums there is still room for higher interest rates even within this current economic cycle.  Since the last vestige for the gold standard ended in 1971 (100% fiat currency) interest rate movements – up or down – are now far more exaggerated.  Simply put there is not enough level of screaming (such as 1979 to 1981) for a secular peak in rates.  So…The name of the game is dollar cost averaging.

Gold:

The Dow to Gold Ratio is currently trading at 12.63 to 1.  The long term average is around 10 to 1.  In relation to gold stocks remain overvalued (no kidding!) with additional upside remaining for gold.  

Unless there is a sea change of biblical size within Congress and President(s) getting their respective acts together for balanced budgets gold will continue move in a saw tooth motion upward.  IMO I would not be surprised at the peak for gold and the low for stocks to end at a 1 to 1 ratio.

Till Next Time

 

PRPFX

1985 to 2025

Permanent Portfolio Fund 

S&P 500 Total Return

$769,371

11.47% average annualized return

*************************

Permanent Portfolio (PRPFX)

$340,823

9.22% average annualized return

DYI:  The premise of this blog is outperformance of the Permanent Portfolio fund while at the same time holding onto the significantly lower drawdowns than the S&P 500.  While attempting to garner ¾ plus of the long term return on a portfolio that is 100% in stocks.  High enough return to achieve our financial goals and (to repeat) significantly lower drawdowns during bear markets.

To illustrate:  The biggest drawdown for the Permanent Portfolio (PRPFX)** was 27.16%, which occurred from May 2008 to November 2008 (or peaking around November 20, 2008).  However it took only 1.4 years (or 221 trading sessions) to recover its previous high.

The S&P 500 greatest drawdown: -56.8% (peak-to-trough drop from October 9, 2007, to March 9, 2009) requiring 5 years and 5 months regaining its previous peak; highlighting the significant difference.

Following DYI’s blog you would have learned that stock valuations during that massive drawdown for stocks were in the bargain range*.  Those with additional dollars to invest would have been loading up on stocks and when the upside turns reducing that break even time period.

People talk the talk of being that “long term investor” but when the manure hits that rotating fan the vast majority will run to the hills locking in large percentage losses.

Till Next Time

*My blog didn’t start until 2014 which of course is after the market smash of 2009.  However I hope you get my point regarding valuations.

**I have zero involvement with the Permanent Portfolio Fund group other than liking the fund and owning shares myself.  The same goes for Vanguard Group of Funds advocated in this blog.  

 Bubble

News!

The S&P 500 is massively lopsided for iT and Ai currently 40% of capitalization; purchasers of this famous index are now high tech speculators.  

When this bubble runs its course the pull back will be enormous at a minimum 50% decline for the S&P 500 from ultimate peak to ultimate bottom.  Estimates have iT/Ai accounting for 92% of GDP’s growth portion when their respective spending simply slows so will economic growth, slow enough we’ll have a recession along with declining stock prices.

Till Next Time 

Bubble

Economics

When will the Bear Return?

If the S&P 500 were currently on its long-term regression line, its value would be 2,439.  Let that sink in!  The S&P 500 as of 10-22-2026 is 7663 or simply put a decline (7663 – 2439) ÷ 7663 x 100 = 68% (rounded) only to return to its average!  WOW!  

Using the 2009 decline as a proxy this would place the S&P 500 at 1683 (rounded) or for a total decline (7663 – 1683) ÷ 7663 x 100 = 78% (rounded)!

My suspicion, my guess, or asking the magic 8 ball; this up and coming decline will be a multi-year along with many fast and furious soon to fail rises as the bear keeps as many participants in stocks riding all the way to the bottom.

The never ending mantra is to buy the S&P 500 index and let the market Gods produce their bake-in-the-cake 10% plus market returns forever!  We the people of mere mortals have (average individual) any where from two to four decades – to put it all together for retirement.  When the bear returned as it did from the year 2000 to 2009 many had to postpone retirement and had to return back to work or face running down their nest egg significantly.

After 50 plus years of investing and talking to individuals of different levels of financial expertise; I’ve come to this conclusion; for the vast majority, their core fund should be The Permanent Portfolio Fund (PRPFX).  The funds excellent downside protection through its fixed percentage of non-correlated assets and yet is able to capture three quarters of the long term return of the S&P 500.

To illustrate:  The biggest drawdown for the Permanent Portfolio (PRPFX) was 27.16%, which occurred from May 2008 to November 2008 (or peaking around November 20, 2008).  However it took only 1.4 years (or 221 trading sessions) to recover its previous high.

The S&P 500 greatest drawdown: -56.8% (peak-to-trough drop from October 9, 2007, to March 9, 2009) requiring 5 years and 5 months to regain its previous peak; highlighting the significant difference.

People talk the talk of being that “long term investor” but when the manure hits that rotating fan the vast majority will run to the hills locking in large percentage losses.

Just as Dave Ramsey and those before him especially Silvia Porter both have one thing in common – your income is your greatest wealth building tool.  Debt free and living significantly below your means, investing wisely you’ll achieve financial security (no matter what those bastards in Washington DC throw at us!).

Till Next Time!             

        

 DYI’s

Real Capitalism Checklist!

Why is everything so expensive??

It’s the LACK of CAPITALISM!

1.)  CRONIC budget deficits from Congress and Presidents of both parties. Pass a balanced budget amendment and debt reduction to the constitution.  

2.)  Federal Reserve (it’s private & has ZERO reserves) must end their ability to money print.  

3.)  Allow multiple currencies to be used within everyday transactions along with gold and silver.  End dollar monopoly!

4.)  Allow Banks to only loan out based on their deposit amount ending their ability to leverage (pyramiding).

5.)  Aggressively enforce the Sherman Anti-Trust Act and bust up these oligarchs END that portion of the GILDED AGE!

6.)  Aggressively enforce the Robinson-Patman Act and Clayton Act to reign in Medical Costs.

7.)  End student loans.  Ending Universities and Colleges monetary gravy train lowering costs SIGNIFICANTLY!

8.)  Vouchers for parents K through 12th grade to be used for their school of choice including home schoolers.

9.)  End property taxes! States use sales taxes.

10.) Strengthen Social Security by systematically and automatically (by law) lifting the caps and bending down retirement benefits to high earners.  Changing Social Security to a pay-as-you-go program if additional dollars are needed will be paid by general revenues.

11.)  DYI's mandatory national savings plan.  Click HERE.

 

Commercial

Mortgage-Backed Securities

Early Recession Indicator?

DYI:  The grind down continues within the K shaped economy this portion of the K is in the upper portion hitting those in the top 10%.  These delinquencies a precursor for a flat out recession?  So far the answer is no.  If long term rates continue to rise they’ll be more delinquency fireworks for sure!