%

Returns Since

Year

2000

From High to Low

+338.0% Gold

+209.9% Transports

+155.5% Utilities

+  94.2% Oil
+  89.9% Dow

+  68.3% S&P 500 

+  63.3% Swiss Franc's  
+  56.7% Nasdaq 

+  55.4% 30yr Treasury Bond

DYI:

What a difference a month makes!  All symptomatic of a massively “jacked up” stock market as many asset categories changed places.  “I don’t get any respect” NASDAQ is finally no longer dead last in the performance derby since the year 2000.  Granted it is second to last but so much for the concept of long term investing without taking into consideration valuation.  Stock returns are bake into the cake based upon valuations.  If you over pay significantly a holding period of 20 or even 30 years will not bail you out only to be subjected to dismal long term returns.

This is why DYI's model portfolio has four diametrically different assets that are moved in price by completely different economic forces.  In other words there is a bull market with at least one of the assets.  Currently gold is slightly below fair value and short term bonds being the most undervalued based upon long term historical valuation measures.  Stocks are jacked up to the moon and long term bonds due to the Fed’s sub atomic low rates are of very little value.  Hence my sentiment indicator based upon valuation showing their positions based on a secular (long term) basis. 

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

So…The name of the game is compounding.  When future returns are low reduce your position and place the proceeds into a different category of greater value with future returns that are higher.  This procedure changes at a snails pace – except during crashes – this is why so many investors become tied to a single asset category that has worked for so long only to be disappointed when the secular upward trend has ended due to massive (my favorite word) over valuation.  Exampled so clearly by NASDAQ’s poor returns since the year 2000.

The Great Wait Continues….Markets will change along with their future returns.  Moving slowly in and out of our four uncorrelated assets with the goal return greater than 10% averaged over rolling 5 year periods.

Cheers!

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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