Dividend Yield Investor!

Friday, October 5, 2018

Bubble

News!

Image result for gap in pension funding calpers chart pictures

Pensions Now Depend on Bubbles Never Popping

(ButAll Bubbles Pop)

The nice thing about the "wealth" generated by bubbles is it's so easy: no need to earn wealth the hard way, by scrimping and saving capital and investing it wisely. Just sit back and let central bank stimulus push assets higher.

The problem with bubble "wealth" is it's like an addictive narcotic: now our entire pension system, public and private, is dependent on the current bubbles in stocks, real estate, junk bonds and other risk assets never popping.

But a funny thing eventually happens to financial bubbles: they all pop. And when the current bubbles pop, they will gut pension reserves, projections and promises.

We're living in a fantasy, folks. Bubbles pop, period. The Dow and SPX rose week after week and month after month in the 1999-2000 bubble, and again in the 2007 bubble, and so did junk bonds and housing. Everything rose in lockstep, lending support to the magical-thinking belief that this bubble will never pop because (insert excuse of the moment): housing never drops, the Fed has our back, etc.

Bubbles pop. To avoid this reality, commentators claim this is not a bubble. Since it's not a bubble, it won't pop. But calling a bubble not-a-bubble doesn't mean it's not a bubble. Wordplay doesn't change reality.

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 10/1/18

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

55% - Cash -Short Term Bond Index - VBIRX

37% -Gold- Global Capital Cycles Fund - VGPMX

8% -Lt. Bonds- Long Term Bond Index - VBLTX

0% -Stocks- Total Stock Market Index - VTSAX

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PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.

DYI

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Quotes

Social Security operates on a simple principal: "You give your money to politicians and they squander it on something else!"

Harry Browne

Fail-Safe Investing

"The only way to "Beat an Index" is to invest in a different and significantly greater - undervalued index."

The Dividend Yield Investor

"Men, it has been said, think in herds; it will be seen they go mad in herds, while they only recover their senses slowly, and one by one."

Charles Mackay

Extraordinary Popular Delusions and the Madness of Crowds

"Outright speculation is neither illegal, immoral, nor (for most people) fattening to the pocketbook."

Benjamin Graham

The Intelligent Investor

Estimated 10yr return on Stocks

Using 5.4% as the historical growth rate of dividends and 4.0% as the ending yield.

Starting Yield*---------return**
1.0%-----------------------(-5.7%)
1.5%-----------------------(-1.7%)
2.0%------------------------1.3%
2.5%------------------------3.8%

3.0%------------------------5.9%
3.5%------------------------7.8%
4.0%------------------------9.4%
4.5%-----------------------10.9%

5.0%-----------------------12.3%
5.5%-----------------------13.6%
6.0%-----------------------14.8%
6.5%-----------------------15.9%

7.0%-----------------------17.0%
7.5%-----------------------18.0%
8.0%-----------------------19.0%

*Starting dividend yield of the S&P500-**10yr estimated average annual rate of return.

DISCLAIMER!

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.