Monday, May 4, 2020



Why Assets Will Crash

Of Two Minds - Why Assets Will Crash

The increasing concentration of the ownership of wealth/assets in the top 10% has an 
under-appreciated consequence:
 When only the top 10% can afford to buy assets, unleashes an almost karmic payback for the narrowing of ownership, a.k.a. soaring wealth and income inequality:
Assets Crash!

This means the pool of potential buyers is relatively small, even if we include global wealth owners.
Since price is set on the margins, and assets like houses are illiquid, then we can anticipate all the markets for assets owned solely by the wealthy to go bidless--yachts, collectibles, vacation real estate--because the pool of buyers is small, and if that pool gets cautious due to a drop in net worth/unearned income, there won't be any buyers except at the margins, at incredible discounts.
Stocks Remain at
Bubble Levels! 
Schiller Cyclically Adjusted PE Ratio (CAPE) – Real or Misleading ...
As of May 1, 2020
26.50
DYI:  With so little potential buyers available when the crash resumes its downward trajectory available buyers will only come out of the woodwork at substantially lower prices.  This descend will take years before a secular bottom – Shiller PE under 10 is achieved.  The Federal Reserve will attempt to buy everything from government and corporate bonds, stocks, to outright junk bonds all to no avail in its desperate attempt to end asset deflation.  Markets just don’t revert to its mean but decline below thus creating it long term average.  What is happening is simply put – revenge of math!

Despite the overall stock market being overvalued oil stocks and those in the energy field in general is a bright spot for purchase.  Energy companies have dropped between 50% to 60% thus spotting current high dividend yields.  Obviously if oil and gas prices stay this low for more than a year dividend cuts will occur, however, at this low price you are being compensated for the risk.  This is for those who have a time horizon for 3 to 5 years and possibly 7 years for this industry to be back on top of game with overvalued stock prices.
Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 5/1/20

Active Allocation Bands (excluding cash) 0% to 50%
62% - Cash -Short Term Bond Index - VBIRX
38% -Gold- Global Capital Cycles Fund - VGPMX **
 0% -Lt. Bonds- Long Term Bond Index - VBLTX
 0% -Stocks- Total Stock Market Index - VTSAX
[See Disclaimer]
** Vanguard's Global Capital Cycles Fund maintains 25%+ in precious metal equities the remainder are domestic or international companies they believe will perform well during times of world wide stress or economic declines.  

 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.
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

No comments:

Post a Comment