Sentiment Location
DYI: Long term investors those who are
investing for a lifetime and especially for multigenerational organizations
knowing the location for the booms and busts is the difference between
excellent returns or those that are subpar (or possibly losses).
Let’s start for those
asset I track that are on top of the mountain – max optimism – and work our way
down the scale to max pessimism.
Currently residential
real estate despite mortgage interest rates moving up from around 3% to 7% home
prices have refused to fall – or only sag minutely – where on the coastal
regions homes have actually increased in price!
Until I see across the board inflation corrected declines in price this
asset – residential real estate will remain at max-optimism.
Stocks are placed at
Denial of a Problem. No longer at
max-optimism but one notch down as all listed stocks on the NYSE
advance-decline line has remained flat since January 2022 only recently as of
March 2024 there has been slight rise.
Bottom line stocks are not moving up in bull market fashion. Less and less stocks are making their
all-time high list that is a major sign of an ageing bull market.
Long term bonds as
opposed to residential real estate have reacted violently to the downside as
rates exampled by the 10 year T-Bond that bottomed at 0.52% (August 4, 2020)
then whipsawed at a breath taking speed racing to 4.80% on September of 2023. Only recently has rates slightly backed off
with the 10 year T-Bond now at 4.22%!
The 10 year T-Bond yield has increased by 711% (current yield)! Wow!
Silver bullion is at
hope. I haven’t changed silver’s
sentiment location a bit more time needs to pass to see if its new higher price
remains. Silver is one of the standouts
due to the Gold to Silver Ratio is massively in favor for silver – 79 to 1. Precious metals are a stand out for value
plus you will have the possibility of an extra kicker when the huge gap between
gold and silver ratio closes back to its average since 1900 at 50 to 1.
Short term bills and
notes of 5 years or less were in the dog house as the Fed’s pursued sub atomic
low interest rate policy for years. Now
that that has changed these short rates are now at their respective mean. For the first time in years savers/investors
are able to make something from their hard earned savings. Unfortunately inflation hasn’t cooled off
enough to make a positive return (negative interest rates). Nevertheless those holding cash equivalents
at least now have a fighting chance.
Gold is at
Optimism. The Dow to Gold Ratio is
currently at 17 to 1 (rounded) measured against its long term average of 10 to
1 since 1900. There is a lot of up side
potential left in gold as we all know markets whether bull or bear will go way
beyond their respective average.
What would a lifetime
investor or multigenerational institution portfolio look like? My model portfolio that only changes as
valuations change looks like this:
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