So far the U.S. is experiencing an earnings recession, however I will continue to watch the employment numbers for a deepening downturn.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 8/1/22

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

47% - Cash -Short Term Bond Index - VBIRX

50% -Gold- Global Capital Cycles Fund - VGPMX **

 3% -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.

Margin of Safety!

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]

Lump Sum any amount greater than yearly salary.

PE10  .........30.99
Bond Rate...4.24%

EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate

1.75 plus: Safe for large lump sums & DCA

1.30 Plus: Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - Purchase Bonds

Current EYC Ratio: 0.84(rounded)

As of  8-1-22
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 is any dollar amount greater than one year salary.

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

%
Stocks & Bonds

Allocation Formula

8-1-22
Updated Monthly

% Allocation = 100 x (Current PE10 – Avg. PE10 / 4)  /  (Avg.PE10 x 2 – Avg. PE10 / 2)]

Formula's answer determines bond allocation.

Current PE10.....30.99

Avg. PE10...........16.96

% Stock Allocation    0% (rounded)
% Bond Allocation 100% (rounded) 

Logic behind this approach:

--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk. 

--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the mean, rather than from volatility. Many agree this is the key to value investing.  

Please note there is controversy regarding the divisor (Avg. PE10).  The average since 1881 as reported by Multpl.com is 16.70.  However, Larry Swedroe and others believe that using a revised Shiller P/E mean of 19.6 , the number since 1960 ( a 53-year period), reflects more modern accounting procedures.

DYI adheres to the long view where over time the legacy (prior 1959) values will be absorbed into the average.  Also it can be said with just as much vigor the last 25 years corporate America has been noted for accounting irregularities.  So....If you use the higher or lower number, or average them, you'll be within the guide posts of value.

Please note:  I changed the formula when the Shiller PE10 is trading at it's mean - stocks and bonds will be at 50% - 50% representing Ben Graham's Defensive investor starting point; only deviating from that norm as valuations rise or fall.        

  

DYI

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.

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham

 Hollowing Out

Of

The United States!

The New Aristocratic Class

Ruling America

BANKERS!

Paul Craig Roberts

Institute for Political Economy

The US financial sector has long looted other countries.  A number of participants have described the process.  First a country is enticed with bribes to the leaders to take out loans that cannot be serviced or repaid.  Then in comes the IMF. Austerity is imposed on the population.  Public services and employment are cut to free resources for debt service, and public assets are sold to repay the loan.  Living standards fall, and US corporations take over the country’s economy.

As foreign governments, having experienced or witnessed the economic carnage and fearing accountability, are less willing to be bribed into indebting their countries, American finance is now applying this technique to Americans.

Contrary to the narrative in the financial press, the Federal Reserve is not raising interest rates in order to fight inflation.  It is ludicrous to think that a three-quarters of one percent rise in a very low interest rate is going to have any impact on a 9.1% rate of consumer inflation or that speculation that the Federal Reserve has in mind another three-quarters of one percent possibly followed by one half of one percent comprise an anti-inflation policy.  If all these increases occur, it still leaves the interest rate below the inflation rate.

Moreover, as I have previously explained, the inflation is not monetary.  The higher prices are the result of supply disruptions caused by Washington’s Covid lockdowns and Russian sanctions. 

 Production stopped and supply chains are broken.  

The Federal Reserve’s rise in interest rates is just a continuation of its policy of concentrating income and wealth in the hands of the One Percent.  Quantitative Easing was the cloak for the Federal Reserve to print $8.2 trillion in new money which was directed or found its way into the prices of stocks and bonds, thus enriching the small number who own most of these financial instruments.  

Having maxed out this avenue of wealth concentration, the Federal Reserve is now raising interest rates in order to drive up mortgage costs to aspiring home owners.

The Federal Reserve is driving individuals out of the housing market in order to free up properties for “private equity” firms to purchase homes for their rental values.  

That private equity firms see rental income from the existing stock of houses as the best investment opportunity tells us that the US economy has played out.

When investment goes into existing assets, not into producing new assets, the economy ceases to grow.

The Obama regimes policy of bailing out the financial fraudsters responsible for the 2008 crash while foreclosing on their victims, reduced American homeownership from 70% to 63 percent. The Urban Institute predicts further declines. Today homeowners’ equity has declined from 85% after World War II to one-third, leaving two-thirds of homeowner equity in the hands of creditors.  

This makes it completely clear that a financialized economy indebts the people for the sake of rentier income to the One Percent.

Indeed, the financialized economy created by the Federal Reserve has reimposed a class system akin to the landed British aristocracy that was overthrown.

  Indeed, we have an economically far worst class system.  The landed British aristocrats produced food that fed the nation.  The American class system produces interest and fees for the financial system.

As Michael Hudson has shown us, a no-growth economy is the end result of a financialized economy.  A financialized economy is one in which consumer income is diverted by debt expansion away from the purchase of new goods and services into debt service and fees–interest on mortgages, car loans, credit card debt, student loan debt.  

With such a large share of household income spent on debt service, little is left for driving the economy forward.

If American economists were capable of escaping from their neoliberal junk economics, they would realize that “the world’s largest economy” they attribute to the United States is total fiction.  The fact is that the United States does not have an economy.  Corporations driven by Wall Street located American manufacturing in Asia so that the One Percent could benefit from higher profits from lower labor costs, while the deserted city and states had to sell their income streams, such as Chicago’s parking meter revenues for 75 years, to foreigners for one lump sum payment to solve one year’s budget crisis.  

The offshoring of American production, carried out under the cloak of “globalism,” destroyed the American economy and the tax bases of cities and states.  While the real economy declines, the Democrat Party, seeking permanent power, has imposed a policy of open borders for immigrant-invaders.  How are these millions of peoples to support themselves in an economy whose manufacturing has been moved abroad?  How can a population, deserted by American corporations, that is experiencing debt deflation absorb the costs of support and social infrastructure for tens of millions of third world immigrant-invaders?

You will never hear it from the whores in the financial press, but the United States is on the precipice of economic and social collapse.

And what are the fools in Washington doing?  The idiots are ginning up wars with Russia, China, and Iran.

Thanks Paul!

DYI  

Is U.S. Intentions to Manipulate Russia to Cut off Gas to Japan and be Replaced by U.S. LNG??

 Oil & Gas

The War Heats Up!

If you don’t know what is going on

“Follow the Money Trail”

Japan’s Kishida steps on Russian oil slick

Indian Punchline

M.K. Bhadrakumar

  Last week, President Vladimir Putin issued a decree that appears to be a step towards nationalisation of the foreign shareholdings in the giant Sakhalin-2 oil and gas project where Mitsui and Mitsubishi hold 22.5% shares. The five-page decree says it is up to the Kremlin to decide whether foreign shareholders should remain in the consortium.

  Meanwhile, Tokyo’s support for the US proposal at the recent G7 summit advocating a price cap on Russian oil has put Moscow’s back up. On Tuesday, the former Russian president Dmitry Medvedev sternly warned that Japan would be kicked out of Sakhalin-2 project and its supplies of Russian oil and gas cut off if it supported the US move. Medvedev forecast that if any price cap is imposed on Russian oil, the market price will touch somewhere between $300-$400 per barrel!

  Sakhalin-2 is critical to Japan for meeting its energy needs. Sakhalin-2 alone meets about 8% of Japan’s gas needs and to replace it, Tokyo has to buy from spot market where competition for LNG shipments globally is currently intense and the price is around 6 times that of Russian gas. Besides, Japan’s entry will tighten the LNG market materially this decade, as Japan will have to compete with Europe.

  As Russia tightens its screws on Japan, it appears Kishida may have bitten more than what he could chew on the price cap idea. Top Japanese experts have doubted the rationale behind Japan’s policy trajectory. Of course, Moscow’s dexterity to use oil and gas as geopolitical tool is not to be doubted. The Kremlin decree on Sakhalin-2 could be intended, partly at least, as a wake-up call that alienating Russia could damage Japan’s vital long-term interests. Patrushev spoke up only four days after that.

DYI:  This article is far more in depth than four paragraphs I placed onto my blog.  This goes without saying – [but I’ll say it anyway] – this is news you will not hear especially on the T.V. main stream press and yet it is off high importance.  If this goes all wrong with oil prices hitting $300 a barrel gasoline prices would be around $15 dollars a gallon!  If prices held at that level for more than 90 days the U.S. will go into a severe recession as bad, possibly worse than the 2009 downturn.  I’m not predicting this to occur but it is a possibility that must be entertained.  With the U.S. stock at nose bleed valuation levels an obvious massive selloff would occur.  So hold onto your hats the Great Wait is over so hang onto your cash and gold better valuation are ahead!

 DYI

      

Don't think for a second all is going back to normal here in the U.S. DHS continues with their staged, FAKED, nobody shot, mass shooting events. Expect every 7 to 10 days till midterm elections faked events!

 

Media

Blackout

Riots and Blockages

Dutch Farmers – Truckers

Protesting Insane Climate Change Government Directives

Videos: Here and Here 

The Brussels Times

Burning hay, tractor blockages: Farmers protest shocks the Netherlands

Wednesday, 29 June 2022

By Belle de Jong
  

A Dutch coalition agreement that earmarked €25 billion to fight nitrogen emissions and allocated a Minister for Nitrogen has sparked nationwide protests by angry farmers. The policy aims to reduce nitrogen emissions by up to 70% in some regions, making agriculture and holding cattle impossible.

The official narrative states that there is a need for a different type of agriculture, which is less intensive and cleaner. However, in practice it comes down to less agriculture, meaning many companies will have to downsize or disappear.

The official narrative states that there is a need for a different type of agriculture, which is less intensive and cleaner. However, in practice it comes down to less agriculture, meaning many companies will have to downsize or disappear.

DYI Quick Comment:  The price of food in Europe will sky rocket!

Meanwhile the Trudeau government states Canadian citizens have no right to private property!  Click HERE for video.

DYI

A Microscopic Improvement for Lt. Term Bonds; however - Valuations need to be Boosted Significantly before DYI turns Significantly Bullish!

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 7/1/22

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

45% - Cash -Short Term Bond Index - VBIRX

48% -Gold- Global Capital Cycles Fund - VGPMX **

 7% -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.

*************************

*************************

Margin of Safety!

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]

Lump Sum any amount greater than yearly salary.

PE10  .........29.24
Bond Rate...4.42%

EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate

1.75 plus: Safe for large lump sums & DCA

1.30 Plus: Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - Purchase Bonds

Current EYC Ratio: 0.85(rounded)

As of  7-1-22
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 is any dollar amount greater than one year salary.

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

%
Stocks & Bonds

Allocation Formula

7-1-22
Updated Monthly

% Allocation = 100 x (Current PE10 – Avg. PE10 / 4)  /  (Avg.PE10 x 2 – Avg. PE10 / 2)]

Formula's answer determines bond allocation.

Current PE10.....29.24

Avg. PE10...........16.95

% Stock Allocation  2% (rounded)
% Bond Allocation  98% (rounded) 

Logic behind this approach:

--As the stock market becomes more expensive, a conservative investor's stock allocation should go down. The rationale recognizes the reduced expected future returns for stocks, and the increasing risk. 

--The formula acknowledges the increased likelihood of the market falling from current levels based on historical valuation levels and regression to the mean, rather than from volatility. Many agree this is the key to value investing.  

Please note there is controversy regarding the divisor (Avg. PE10).  The average since 1881 as reported by Multpl.com is 16.70.  However, Larry Swedroe and others believe that using a revised Shiller P/E mean of 19.6 , the number since 1960 ( a 53-year period), reflects more modern accounting procedures.

DYI adheres to the long view where over time the legacy (prior 1959) values will be absorbed into the average.  Also it can be said with just as much vigor the last 25 years corporate America has been noted for accounting irregularities.  So....If you use the higher or lower number, or average them, you'll be within the guide posts of value.

Please note:  I changed the formula when the Shiller PE10 is trading at it's mean - stocks and bonds will be at 50% - 50% representing Ben Graham's Defensive investor starting point; only deviating from that norm as valuations rise or fall.        

  

DYI

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.

The Formula.

A value based allocation strategy

February 19, 2010 by John Kingham

Oil Indicator

7/01/22
Updated Monthly

Oil Prices: 
7/05/17......$45.13

7/01/22......$107.91   

Up 139%(rounded)
(oil prices approximately five years earlier due to weekends & holidays)
West Texas Intermediate prices   

 OIL INDICATOR:  NEGATIVE!  

Oil prices are well known for their volatility in the short term, longer term due to dwindling reserves energy prices are in a secular bull market.  Technologies such as fracking will extend the life of oil fields but major new discoveries arrive at a snails pace far slower than the world's growth.  

As long as prices rise in a slow and orderly pace our economy can adjust to those changes, however if prices spike (international tensions, war etc.) high energy costs behave as a massive deflationary tax. This will send our economy tumbling down and very possibly the U.S. stock market.

If oil prices rise greater than 75% from five years earlier, investors at that time should shift their portfolio geared towards deflationary times.  This would be an oil indicator as negative.

If oil prices rise from five years earlier less than 10% or drop then the inflationary play is in effect; a positive for economic growth along with possible higher stock prices.

Where to find five year earlier oil prices?  Alaska Department of Revenue    

Oil indicator positive                
  5%  High-Yield Corporate Bonds
10%  REIT's
10%  Energy
10%  P.M.'s
65%  Small Caps
  0%  Lt. Gov't Bonds

************************************

Or...Investors desiring simplicity

100% Vanguard's Wellington Fund symbol VWELX

On average 65% stocks - 35% bonds

Oil indicator negative
  5%  REIT's
10%  Energy
10%  P.M's
10%  Small Caps
65%  Lt. Gov't Bonds

************************************

Or...Investors desiring simplicity

100% Vanguard's Wellesley Income Fund symbol VWINX

On average 35% stocks - 65% bonds

Vanguard Funds

REIT's
REIT Index Admiral  VGSLX

Energy
Energy Fund  VGENX

Precious Metals (P.M.'s)
Global Capital Cycles Fund VGPMX

Small Caps
Small Cap Value Index Admiral  VSIAX

High-Yield Corporate Bonds
High-Yield Corporate Bond Fund VWEHX

Long Term Government Bonds
Long-Term Government Bond Index Admiral  VLGSX

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.

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.