Monday, December 24, 2018

Buckle Up!
We’re in for a Bumpy Ride! 
A death cross is formed when a stock’s 50-day moving average crosses below its 200-day moving average. The bearish technical move implies the rapid deterioration of a stock’s upward momentum.
DYI:  This is the type of fireworks DYI has been anticipating for longer than I care to admit; as valuations for the long term investor as opposed to speculators has bumped us out of the stock market and in our opinion rightfully so!  Is this the long awaited downdraft??  Maybe!? Who knows for sure?

What we do know stocks purchased or held today, going to sleep like Rip Van Winkle waking 12 years from now your average annual estimated return is – drum roll please – 2.80%.  I’m actually amazed that the return is positive.  However this is a nominal return before management fees, commission, trading impact costs, taxes, and of course the biggest tax INFLATION!  Factor in a typical 401k with a managed stock fund with a 1% management fee with a typical 0.50% trading impact drag on performance plus the Fed’s achieve their 2% inflation that equals 3.5%.  Subtract that from 2.8% nominal return you now have an estimated return after all costs negative 0.7%!
Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/18

Active Allocation Bands (excluding cash) 0% to 50%
56% - Cash -Short Term Bond Index - VBIRX
36% -Gold- Global Capital Cycles Fund - VGPMX
 8% -Lt. Bonds- Long Term Bond Index - VBLTX
 0% -Stocks- Total Stock Market Index - VTSAX
[See Disclaimer]
 So….If you have any debts such as a car/truck payment, credit cards or student loans put extra dollars there first as those interest costs are greater than the return from stocks.  Hang on to your cash better valuations are ahead.  The Great Wait may have ended as the long awaited bear market arrives.
TILL NEXT TIME 
  DYI
Here is the link to Money Chip all you have to do is plug in the numbers – they do the math – to determine the estimated average annual return for stocks.
          
      

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