U.S. Stock Market Leaps to a Higher Valuation! Shiller PE at 36.43 and Scant Dividend Yield at 1.36% EYC Ratio Drops to 0.58!

 Special Update

Ben Graham’s Corner 

DYI:  Up to date estimated 10yr average annual return for stocks – [S&P 500 index fund, generalized growth fund etc.] – held or bought today; go to sleep like Rip Van Winkle waking 10 years from now your return (estimated) will be…Drum Roll Please…NEGATIVE 1.31%!  This is with dividends reinvested.  Go to money chimp and plug in the numbers!

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  .........36.43
Bond Rate...5.20%

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: 0.58(rounded)

As of  3-19-24
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