DYI’s

4 Assets

Update

DYI:  DYI today has moved our sentiment indicators for gold and long term bonds.  Gold is moved down a notch from relief (at it mean) to hope (slightly undervalued).  Long term bonds as interest rates appear to be moving up have been dropped a notch as well to Denial of a Problem.

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms* Short Term Bonds
Depression MMF
Hope Gold
Relief *Market returns to Mean* 

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* U.S. Stocks
Denial of Problem Long Term Bonds
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!
Capitulation

Long term bonds have been in a bull market since September of 1981 as 10 year T-Bonds peaked at 15.32% and bottomed on July 2016 at 1.50%; currently trade at 2.38%. 

DYI does not know where markets are headed (nor does anyone else) all I do know, with some degree of accuracy the under or overvalue of our four asset categories.  Have high quality long term bonds reached their peak with sub atomic low rates bottoming out?  The truthful answer is MAYBE.  The world economy good very well go into recession creating a deflationary smash pushing rates down to the possibility of going negative.  I’m not predicting this scenario however it is a possibility.  This is why my model portfolio holds only 4% in long term bonds as rates remain sub atomic precluding anything but a minor commitment.

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 3/1/17

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

74% - Cash -Short Term Bond Index - VBIRX

22% -Gold- Precious Metals & Mining - VGPMX

 4% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

Gold has now left its mean return and is slightly undervalued as shown by the chart below.

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DYI:  Since the year 2000 gold has been on a tear despite the massive selloff as shown by the chart below.

 

3-1-17
Updated Monthly

Secular Market Top - Since January 2000

+  82.7% Dow       

+218.8% Transports 

+146.5% Utilities

+62.2%  S&P 500

+44.3%  Nasdaq

+52.5%  30 yr Treasury Bond

+323.5% Gold

+108.3% Oil
  +56.1% Swiss Franc's

    

From High to Low

+323.5% Gold

+218.8% Transports

+146.5% Utilities

+108.3% Oil
+  82.7% Dow

+  62.2% S&P 500 

+  56.1% Swiss Franc's  
+  52.5% 30yr Treasury Bond 

+  44.3% Nasdaq

Since the year 2000 gold has out performed all other asset categories.  However over a shorter time perspective such as the stock market rally from 2009 to today gold is at the short end of the stick.  DYI’s weighted averaging formula was systematically reducing our precious metals mining company’s commitments and adding the proceeds to stocks as their valuations improved.  No doubt the remaining precious metals mining companies took a hit to the downsides however our long term bonds flew to the upside along with the meteoric stock market returns.  Overall a positive return for our four asset category portfolio.

It is ironic that Short term bonds, money market funds and gold (precious metals mining companies) are the most undervalued assets as world wide central banks including our own Federal Reserve (its private and they have no reserves) have MASSIVELY distorted markets the world over.  This will not end well.  DYI’s expectation based upon history and valuations is for U.S. stocks to drop by 55% to 70%!  Cutting the market by half will not bring the market back to its mean.  This is how overvalued the market has become do to the insane central bank policies.

The Great Wait Continues….

DYI