U.S. Stocks

Remain Insanely

Overvalued

When will the Bear Roar? 

The market is a pendulum that forever swings between unsustainable optimism, which makes stocks too expensive, and unjustified pessimism, which makes them too cheap.

The intelligent investor is a realist who sells to optimists and buys from pessimists.

– Benjamin Graham

Professor Hussman monthly market comment

MarketCap/GVA at higher levels than at the 1929 and 2000 bubble peaks may help to understand why Berkshire Hathaway holds the largest pile of cash in its history (primarily in Treasury bills comfortably earning about 4.5%). Market conditions and valuations will change. In the meantime, both patience and discipline will matter.

Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope - Silver F

Relief *Market returns to Mean  - Short Term Notes & Bills or MMF

Smart Money - Buys the Dips!

Optimism - Gold

Media Attention

Enthusiasm

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks 

Denial of Problem  

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 YouTube

Financial Experts?

They Never Discuss VALUATIONS!

The problem with so many of these videos is ZERO discussion regarding valuations. Such as the all important Shiller PE, dividend yield or current interest rates. All very simplistic simply stating buy the S&P 500 no matter the level of valuations and everything will just be fine. Hold long enough and you will always reach the magical 10% return!

Currently today the Shiller PE is at nose bleed levels at 38 times income generated by the corporations who make up the S&P 500 https://www.multpl.com/shiller-pe The long term average since 1872 (that's right 1872) is 17 times earnings. This valuation is now greater than 1929 but less than the year 2000. Add on a tiny dividend yield of 1.22% (avg. is 4.24%) https://www.multpl.com/s-p-500-dividend-yield

So...Let's put this all together we know on average how fast the economy, corporate profits will increase on an average basis this return will be [very] close to the anticipated return over a 10 year period. The Shiller PE is 38 the average is 17 and the current yield is 1.22%. Simple algebra don't worry lets go to money chimp and let them do the math. http://www.moneychimp.com/features/market_predictor.htm

Enter the this data for the next 10 years for stocks bought or held today - go to sleep like Rip Van Winkle - awake 2034 your estimated average annual return will be - drum roll please - NEGATIVE 1.92%!!

Please note this is before any expenses such as a 1% or 2% to run the mutual fund AND of course the ever present INFLATION. [If your 401k has fee's of 1% or greater open with Vanguard their Roth IRA and only 401k up to the match any monies left over use a low cost provider such as Vanguard in a taxable account (non retirement).

Bottom line this is a very bad time to buy stocks or a whole sale basis such as a S&P 500 index fund or a general growth fund so prevalent in 401k's.

One last item for ultra long term types. Lets change the holding period from 10 to 20 years for these dollars invested today. Drum roll please - POSITIVE 2.06% average annual return estimated. How bout 30 years...Drummer please - POSITIVE 3.42% After inflation and fee's Alpo will become your favorite meal in retirement.

What to do for the your stock to bond or your stock, bond, gold allocation. Follow my blog and copy down the math as I'm currently 70 years old (still in good health) but I won't be be around forever.

Till Next Time

Real Estate

Bubblenomics!

Here we are again with residential real estate jack up to the moon as the chart below (just scroll down) clearly shows the unaffordability of home ownership.  Those who do buy at this level with 43% of their income going to a mortgage will struggle for years until inflation finally bails them out. 

The cost of course is not just the mortgage there is maintenance  a common rule of thumb for estimating residential maintenance requirements based on square footage is to budget roughly $1 per square foot of living space annually for maintenance costs; meaning a 2,500 square foot home would need around $2,500 per year for upkeep.  Then there is the beloved HOA fees that can range from anywhere from $100 per month along with some as high as $500+!

IMO residential real estate is not going to crash as we saw during the Great Financial Crises they simply will sag in price then rise in price over the next 10 to 15 years UNDER PERFORMING the rate of inflation.  Simply put rising around 1% to 2% while inflation remains around 5%.  Many will end up selling at an illusionary profit with proceeds that have purchasing power significantly reduced.

 

Be Sure

To Know the Difference

Your Life Will Depend On It!

Flu       Bird Flu

Fever             Fever

Aches             Aches

Chills              Chills

Fatigue           Fatigue

Nausea           Nausea

Stuffy Nose    Stuffy Nose

 Best Time

To Buy a House?

When Cost is Below Rents!

DYI:  The obvious downside is that you will have to wait years before your next opportunity and yet there is the upside for having a greater down payment, basic savings, along with additional dollars for retirement since your outlay is less by renting (see chart below).

In my opinion homes purchased today will underperform inflation for the next 20 years.  The house will increase in price but when you factor inflation when selling, the gain will have a reduced purchasing power.

Putting some numbers to the equation the gain is 1% to 2% per year on average for the house with inflation on average over the next 20 years at 5%.  Doesn’t take a math genius to figure out that home owner is on the losing end.

Rents will go up in cost and yet it will take years (most likely 10 to 15 years) before they catch up to a purchase price of the home.  Remember a landlord can only charge what the traffic will bear therefore impossible to arbitrary raise rents unless willing to have numerous units vacant (losing money) in the case of an apartment complex or a house sit idle (losing money again) waiting for the next tenant.

Since the year 2000 a housing crash was required to bring down costs below rents and most likely will be required again for homeownership below cost.               

 U.S.

Stocks

Massively Overvalued!

Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope - Silver F

Relief *Market returns to Mean  - Short Term Notes & Bills or MMF

Smart Money - Buys the Dips!

Optimism - Gold

Media Attention

Enthusiasm

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks 

Denial of Problem  

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 

Home Ownership

Joy or Money Pit?

The six main cost pillars of home ownership are:

Upfront costs: These include the ongoing mortgage payment, down payment, closing costs, and moving costs.

Ongoing costs: These include property taxes, insurance, and maintenance.

Utilities: Homeowners are responsible for utilities like water, sewer, electricity, internet, and cable.

Homeowner's association (HOA) fees: If the home is part of an HOA, homeowners must pay a monthly or quarterly fee to maintain the community's amenities.

Repairs and maintenance: Homeowners are responsible for routine maintenance and repairs, such as lawn care, pest control, plumbing repairs, roof replacement, and appliance replacement.

Furnishings: Homeowners may need to purchase new furnishings, especially if they are moving into a larger home.

 Inflation

The Killer of Wealth

Since the Year 2000

Purchasing Power has Decline

By

-43% 

The cumulative loss of purchasing power in the United States since 2000 is significant, with the value of a dollar in January 2000 having the same purchasing power as $1.76 in March 2023. This is due to inflation, which is the gradual loss of purchasing power over time as prices for goods and services increase. 

 

Here are some examples of how purchasing power has changed since 2000:

• Social Security

  Social Security benefits have lost 36% of their buying power since 2000. This is one of the largest losses recorded by a study that compares the growth in the COLA with changes in the price of goods and services typically used by retirees. 

   
• Cost of goods and services for retirees

  The cost of goods and services purchased by typical retirees has increased by more than 141% since 2000. For example, a $100 a retired household spent on groceries in 2000 would buy only $64 worth today. 

   
• Federal Reserve Note

  The US Federal Reserve Note (U.S. Dollar) 
• 
  
• Has Lost
• 
  
•  Approximately 43.2% of its value since 
• 
  
• January 2000

 

American Dream

You have to be asleep

To Believe it?

• Retirement: $1.6 million 
• Homeownership: $930,000 
• Raising two kids: $832,000 
• Owning new cars: $811,000 
• Annual vacations: $179,000 
• Wedding: $44,000 
• Pets: $37,000 
• Funeral: $8,000 

Healthcare CEO's Murder

Is

Another Fake

By

MilesMathis

First published December 5, 2024

I hate to be the bearer of bad tidings, but that asshole is still alive somewhere, probably on some island beach.  I knew it the moment I saw this story. How?  You are about to find out.

The first clue is that police released footage immediately to the press, so I knew the police and press were in on the fake.  If this were real they wouldn't be airing it to the public within hours.  It would be considered a snuff film.

The second clue is that CEOs of big healthcare companies like this are not walking around by themselves on the streets of Manhattan at night. Precisely for this reason.  You will say this was in the morning, but we can see from footage it was still dark (about half an hour before sunrise). Tony Fauci and Albert Bourla are known to have heavy security, and we may assume the same for Brian Thompson.

The third clue is that the film looks fake. The guy playing Thompson is a bad actor and his reactions are comical.  Plus, notice what no one else has: the SUV right there hits its brake lights and leaves them on right as the film starts.  What does that mean?  It means AAAANNNDD. . . ACTION!

The fourth clue is that it is convenient, isn't it, that this murder just happened to take place right beneath a street camera aimed directly at the scene, with our boys center of frame.  Front and center, but from the back, so we can't identify Thompson.

The fifth clue is the photos released the next day of the shooter.  No way they would have multiple photos of this guy with his mask down and smiling.  What's the point of a hoodie and mask if you are going to walk around posing for the cameras with them off?

The sixth clue is the cutesy messages on the shell casings: DENY DEFEND DEPOSE.  Just stinks of Langley, doesn't it?  These effin' script-monkeys don't know when to stop.

The seventh clue is ex-New York Times crazy cunt Taylor Lorenz coming down on the side of revolutionaries here, saying Thompson had it coming. Sure he did, but that isn't the weird thing in this case.  The weird thing is that Lorenz is saying it.  She's crazy, yes, but anyone would expect her to be crazy in the opposite pasture here. So her comments also look scripted, indicating to me she has been paid to make the event look real.  If she has to do that by celebrating the fake death, well OK.  Sometimes that is the best way to sell an event, you know.

The eighth clue is social media being inundated with a million influencers and commenters, all selling this as real.  The usual agents crawl out of the woodwork immediately to shove this story down your throat.

But the ninth clue is the decider: today it was reported that Thompson was under investigation by the Justice Department for insider trading, monopolistic practices, and possible racketeering.  So just when he needed to disappear, he did.  Just a whacky coincidence, I'm sure.

More to come, no doubt, as they catch this actor and try him in a dummy court, to properly salt this in.

What do you want to bet it will be a bench trial with a deputy DA prosecuting him?

Thank You Miles Mathis

Stocks

Overvalued?

Warren Buffett Agrees!

Buffett T-bills & Chills: Piled up T-bills, Ditched Stocks, Bonds, and Share Buybacks in Q3

by Wolf Richter • Nov 2, 2024

Cash is king for Warren Buffett. His investment vehicle, Berkshire Hathaway, continued to dump its two biggest stock holdings in Q3, Apple and Bank of America. It was a net-seller of stocks for the eighth quarter in a row, selling $36.1 billion of stocks, and buying only $1.5 billion, for net sales of $34.5 billion. It didn’t buy back any of its own shares. And it further increased its already huge pile of cash, particularly its Treasury bills, according to Berkshire’s Q3 earnings report released on Saturday.

In the quarter through September 30, Berkshire Hathaway piled on an additional $48 billion in cash, cash equivalents, and Treasury bills, bringing the total cash pile to $325 billion, nearly double where it had been a year ago.

DYI:  Warren Buffett is simply responding to the massive historical overvaluation of the stock market in general and reducing significantly his exposure to any of the high flying technology companies. 

DYI is an offshoot to Harry Browne’s permanent portfolio that maintains 25% at all time in Stocks, Lt. Bonds, Gold, and Cash equivalents.  I adjust the exposure based on how far above or below the mean valuation for Stocks, Lt. Bonds, and Gold anywhere from 0% to 50%.  Cash equivalents are my default position ranging from 0% to 100%.  My adjustment is based simply using a formula that increases or decreases the percentage held depending on how deep or steep those three assets are away from their mean.  Today and for a very long time stocks are outrageously overvalued!      

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 12/1/24

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

29% - Cash -Short Term Bond Index - VBIRX

49% -Gold- Global Capital Cycles Fund - VGPMX **

 22% -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.  

  Smart Money - Buys Aggressively!

Capitulation

Despondency

Max-Pessimism 

Depression 

Hope - Silver F

Relief *Market returns to Mean  - Short Term Notes & Bills or MMF

Smart Money - Buys the Dips!

Optimism - Gold

Media Attention

Enthusiasm

Smart Money - Sells the Rallies!

Thrill

Greed

Delusional

Max-Optimism  Residential Real Estate   - Stocks 

Denial of Problem 

Anxiety 

Fear

Desperation - Long Term Bonds

Current Economic Conditions

Prosperity - Moderate

Recession - Shallow

Deflation - None

Inflation - Moderate

Economic Choices

None

Shallow

Moderate

Prominent

Extreme 

 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.

 Expected Net Worth

Are you on track to be a Balance Sheet Accumulator of Wealth?  To determine if you are, here are three simple levels Gold, Silver, or Bronze based upon your age and income. 

Simply use our multiplier based upon your age times your three years average income.

These dollar amounts do NOT include housing values.

Example:  $50,000 average income and you are 40 years of age.  The Bronze level is 10% (.10) x 40 x $50,000 = $200,000 

Bronze Level [10%(.10) x Age] x Avg. Income = Expected Net Worth.

Silver Level   [20%(.20) x Age] x  Avg. Income = Expected Net Worth.

Gold Level     [30%(.30) x Age] x Avg. Income = Expected Net Worth.

Using our example of a 40 year old with an average income of $50,000 if he or she equals or exceeds $200,000 you would be comfortable in relationship to your income.  At the Silver Level this would equate to being Affluent $400,000 and the Gold Wealthy $600,000.

At the Bronze Level you will be comfortable plus Social Security in your old age.  You are on track to be way ahead of the average saver (which is almost saving nothing).

At the Silver Level Social Security is simply an add on to your income during your old age.  At this level your wealth is enough to displace the need for Social Security.

At the Gold Level early retirement (if you so desire) possibly in your early to mid 50's, this would depend upon your average level of income. 

The age old adage is so true; live below your means save and most importantly invest the difference. Stay away from personal debt, purchase a house at or less than 2.0 times your income (or the equivalent in monthly rent) purchase modest used car(s) for cash and you are on your way to financial freedom.

DYI