Stock Market Valuation

Greater than all U.S. History!

Crescat Capital

Value– Driven Performance

US large cap stocks are the most overvalued in history, higher than prior speculative mania market peaks in 1929 and 2000.  We prove it conclusively across six comprehensive dimensions:   

1. Price to Sales 

2. Price to Book 

3. Enterprise Value to Sales 

4. Enterprise Value to EBITDA 

5. Price to Earnings 

6. Enterprise Value to Free Cash Flow 

Brutal bear markets and recessions have historically followed from record valuations like we have today, and this time will almost certainly be no different. Not even positive macro factors like low interest rates, low inflation, or recently improving earnings growth can justify today’s extreme valuation levels. As we show herein, that was the same backdrop that we had in 1929, the setup to the biggest market crash in history and the Great Depression.

DYI:

Excellent 23 page report with plenty of easy to understand charts showing conclusively the market is now more overvalued in U.S. stock market history!  Obviously this will not end well with a deflationary smash on the horizon with world wide central banks digitally printing money at a rate no one thought possible.  First deflation; with negative interest rates going out as far as the 5 year T-notes and even possibly 10 year T-bonds as well. Then inflation as all of the digital printing “kicks in” is DYI’s scenario for the American economy.  Hopefully enough fully awake citizens will rise up after taking a left hook to the gut – deflation – and then a right upper cut square on the chin – inflation – DEMANDING THE CLOSING OF OUR CENTRAL BANK. 

Be as that may be…Protect yourself with high levels of cash modest position in precious metals mining shares [along with physical gold and silver] and zero stocks.  Long term bonds are at a historically high (sub atomic low rates) with DYI’s model portfolio only holding a 1% position.

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/17

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

72% - Cash -Short Term Bond Index - VBIRX

27% -Gold- Precious Metals & Mining - VGPMX

 1% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

In a deflationary smash interest rates will fall significantly posting profits for the more daring speculators.  Here at DYI our formula will increase our exposure as rates improve thus increasing your rate of compounding.  Until dividend yields and/or interest rates improve DYI will maintain my ultra conservative stance.

DYI’s MISSION:

First and foremost is preservation of principal then to outperform over rolling 5 year periods the return on stocks – 10.2% - since 1926.  Please note we are currently living in of MASSIVE overvaluation creating scorching red hot returns for stocks DYI has no doubt under performed my benchmark of 10.2% for the past 5 years.  When the bust arrives DYI will catch up pronto passing the speculators with no money to put to work. 

With that said DYI is a compounder…The concept is simple my formulas increases or decreases the model portfolio depending upon the asset above or below their respective long term mean since 1871.  Here is another way to explain our formulas – this is what they do – would you prefer do compound your money at a dividend yield (stock example) of 2% or 6%?  No it’s not a trick question.  Of course 6 is better than 2.  For a more in depth explanation; click at the top of the blog – INVESTMENT METHOD.

DYI