Bubble
News
Insane
Valuations!
DYI: If the stock market and interest
rates continue to rise together a crash scenario will present itself. I’ve refigured Ben Graham’s Corner the EYC
Ratio has now dropped to 1.16! Under one
it is advocated to sell all stocks and purchase bonds. Currently holding stocks but purchase bonds
with any new money as valuations simply do not warrant additional purchases of
stocks.
Ben Graham's Corner
Margin of Safety!
1.75 plus: Safe for large lump sums & DCA
1.30 Plus: Safe for DCA
Central Concept of Investment for the purchase of Common Stocks.
"The danger to investors lies in concentrating their purchases in the upper levels of the market..."
Stocks compared to bonds:
Earnings Yield Coverage Ratio - [EYC Ratio]
EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate
1.75 plus: Safe for large lump sums & DCA
1.29 or less: Mid-Point - Hold stocks and purchase bonds.
1.00 or less: Sell stocks - Purchase Bonds
Current EYC Ratio: 1.16(rounded)
As of 3-15-21
Updated Monthly
Updated Monthly
PE10 as report by Multpl.com
Bond Rate is the rate as reported by
Vanguard Long-Term Investment-Grade Fund Investor Shares (VWESX)
DCA is Dollar Cost Averaging.
Lump Sum any amount greater than yearly salary.
PE10 ..........35.47
Bond Rate...2.67%
Lump Sum any amount greater than yearly salary.
PE10 ..........35.47
Bond Rate...2.67%
Over a ten-year period the typical excess of stock earnings power over bond interest may aggregate 4/3 of the price paid. This figure is sufficient to provide a very real margin of safety--which, under favorable conditions, will prevent or minimize a loss......If the purchases are made at the average level of the market over a span of years, the prices paid should carry with them assurance of an adequate margin of safety. The danger to investors lies in concentrating their purchases in the upper levels of the market.....
Common Sense Investing:
The Papers of Benjamin Graham
Benjamin Graham
The Papers of Benjamin Graham
Benjamin Graham
DYI
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