J. Paul Getty Quote!

Stock Market - "For as long as I can remember, veteran businessmen and investors - I among them - have been warning about the dangers of irrational stock speculation and hammering away at the theme that stock certificates are deeds of ownership and not betting slips.

The professional investor has no choice but to sit by quietly while the mob has its day, until enthusiasm or panic of the speculators and non-professionals has been spent. He is not impatient, nor is he even in a very great hurry, for he is an investor, not a gambler or a speculator. There are no safeguards that can protect the emotional investor from himself."

Hard-Won Lessons and the Bird in the Hand 

John P. Hussman, Ph.D.

Meanwhile, the S&P 500 is more than double its historical valuation norms on reliable measures (with about 90% correlation with actual subsequent 10-year market returns), sentiment is lopsided, and we observe dispersion across market internals, along with widening credit spreads. These and similar considerations present a coherent pattern that has been informative in market cycles across a century of history – including the period since 2009. None of those considerations inform us that the U.S. stock market currently presents a desirable opportunity to accept risk.

As was true at the 2000 and 2007 extremes, Wall Street is quite measurably out of its mind. There's clear evidence that valuations have little short-term impact provided that risk-aversion is in retreat (which can be read out of market internals and credit spreads, which are now going the wrong way). There's no evidence, however, that the historical relationship between valuations and longer-term returns has weakened at all. Yet somehow the awful completion of this cycle will be just as surprising as it was the last two times around – not to mention every other time in history that reliable valuation measures were similarly extreme. Honestly, you’ve all gone mad.

DYI Comments:  All pages have been updated as it is the beginning of the month, valuation have continued to move northward reducing our exposure to zero for bonds, stocks, and REIT's.  The market and central banks have lost their minds for they truly have "gone mad!".  Valuations are now so extreme that our Aggressive Portfolio has only a modest commitment to gold mining companies and the rest is in cash!  All metrics of common sense have now been thrown out the window as this has become a speculator's market.

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/14

Active Allocation Bands (excluding cash) 0% to 60%

83% - Cash -Short Term Bond Index - VBIRX

17% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX
 0%-REIT's- REIT Index Fund - VGSLX

[See Disclaimer]

DYI's Super Max Portfolio (below) has increased our short position to 14% (Prudent Bear Fund)! How high will this market go??  DYI doesn't know and nor does anyone else; what we do know valuations are now so severely stretched any investment merit is now gone!
12-1-14

Maximum Aggressive Portfolio

(Super Max)

69% Cash - Hussman Strategic Total Return Fund - HSTRX

17% Gold - Tocqueville Gold Fund - TGDLX

  0% Lt. Bonds - Zero Coupon 2025 Fund - BTTRX

14% Stocks - Federated Prudent Bear Fund - BEARX

  0% REIT'S - REIT Index Fund - VGSLX
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DYI