Bubble
News!
J. Paul
Getty Quote!
Stock Market - "For as long as I can remember veteran
businessmen and investors - I among them - have been warning about the dangers
of irrational stock speculation and hammering away at the theme that stock
certificates are deeds of ownership and not betting slips.
The professional investor has no choice but to sit by quietly
while the mob has its day, until enthusiasm or panic of the speculators and
non-professionals has been spent. He is not impatient, nor is he even in a very
great hurry, for he is an investor, not a gambler or a speculator.
There are
no safeguards that can protect the emotional investor from himself."
The longer a bull market lasts, the more severely investors
will be afflicted with amnesia, after 5+ years many will believe that bear
markets are not even possible. Except
for the brief hiccup during COVID scam the U.S. stock market has been a rocket
ship since 2009. This has ingrained into
people that making money in stocks is easy and most importantly no price is too
high in relation to sales, earnings, or dividends! Just buy the S&P 500 index fund and enjoy
10%+ returns as far as the eye can see.
This insanity began since 2018 – that’s not a typo – the U.S.
market has and continues to be powered up by massive government spending and
until of late sub atomic low interest rates powering up animal spirits. However the economic backdrop is in the
process of change as government overspending has now come to a point where
Treasury bond investors are demanding ever higher rates especially long
duration buyers. Chronic budget deficits
equals’, Central bank monetization, equals higher inflation, equals higher
interest rates, equals depressed price to earning multiples for stocks. The doom loop for long duration bond buyers
along with dismal stock market returns experienced from 1966 to 1982.
My investment approach is an offshoot of Harry Browne's
Permanent Portfolio that maintains a fixed 25% invested in the above four asset
categories listed above. Harry's
uncorrelated assets at the time were ground breaking. Today it is taken for granted. As much as I was impressed with Harry's work
it always made me uncomfortable (made my hair catch on fire!) to always own 25%
in each asset. When valuations are at extreme lows a greater percentage is
called for and conversely at historical nose bleed levels significantly less
(or none).
DYI’s approach working through our four assets and
determining with a measure of accuracy the percentage invested depending upon
long term valuations. This is done by
calculating our averaging formula for each asset.
If all three assets - gold, stocks, long term bonds, cash is our default position - are at fair or average value then each of the categories will be at 25% of the portfolio just like Browne's Permanent Portfolio. However as prices move up or down from their respective mean our averaging portfolio will make the adjustment enhancing the overall return with less risk.
UPdated monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 5/1/26
** 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.
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS.
No comments:
Post a Comment