Oil Indicator

08/01/19
Updated Monthly

Oil Prices: 
08/01/14....$103.52

08/01/19......$61.81   

Down 40%(rounded)
(oil prices approximately five years earlier due to weekends & holidays)
ANS West Coast prices   

 OIL INDICATOR:  Positive  Oil indicator will remain positive until it's rise is greater than 75% from five years earlier.

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

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

PROBLEM – REACTION – SOLUTION

FASCISM

COLLUSION BETWEEN

BIG GOVERNMENT AND BIG BUSINESS

All of these mass shootings are nothing more than DHS FEMA drills; no one was shot and obviously no one was killed nor wounded. All acted out by a bevy of low rent CRISES ACTORS then promoted as [paid by our government] real by the PROPAGANDA spewing main stream media!

PROOF??  

Go to 153new.net for hard hitting truther videos showing very clearly these are staged faked events.  When studied with a clear eye their fake-ness is to the point of being absurd.

Another site is a top notch researcher Miles Mathis Updates [just google that up] who has been researching DECADES past and present staged faked or hoaxed events throughout American history.  You will be shock as to the breath and depth of PROPAGANDA the American public has been subject to for over 100 years!

This PROPAGANDA is now legal [before done illegally] with the repeal of the Smith/Mundt Act in 2012.  It appears that DHS and other government agencies [such as the Special Activities Division of the CIA] have around 5 billion dollars to spend on these dog and pony propaganda shows.

WHY??  

Let's start with the faked schools mass shootings.  These are designed to strike fear into the parents and especially the MOMS who will demand safety measures placed into the schools.  Classic PROBLEM – REACTION – SOLUTION…DHS [and other agencies] is the biggest promoters of these propaganda events by creating a problem, waiting for the reaction, then ride in on their white horse with the solution.  The solution is for security companies which are owned by the very rich AND are run by numerous ex DHS and/or FEMA employees!

WHAT ARE THEY SELLING??  

Here is a list of the top selling items.  Bullet resistant glass windows, metal detectors, CCTV Networks, hardened doors, scanners [great let’s radiate our children daily!], software & physical security services.

HOW BIG IS THEIR MARKET?? 

There are as of the 2010 census 98,817 public schools; from beauty schools to Harvard there are 5,300 Universities/Colleges; the Federal government owns 306,000; I attempted to find out how many buildings the States, Counties, or Local governments own without any luck.  Be as that may be this is classic FASCISM – collusion between big business and big government – through manipulation of the public to foist upon them an unnecessary security upgrades costing the tax payers over the course of one or two decades in the TRILLIONS!  This is big business at its worst…We the taxpayers get the BILL and these corporations get the THRILL of increased revenues/profits.  Always remember who owns these companies they are the ones who are pulling the strings from behind the scene.  The get the THRILL and we the people get the BILL!

WHAT ELSE ARE THEY SELLING?? Don’t be shocked…It is for GUN SALES!  That’s right gun sales [not a typo]!  Have you ever noticed despite all of the rhetoric legislation actually goes nowhere?  Or Presidential executive orders are smacked down by the courts routinely?  Our elites and very possibly ex government officials are making money as the expression goes hand over fist.  

PROBLEM – REACTION – SOLUTION. 

Scare the hell out of gun owners with the possibility of strict firearms legislation banning weapons and they will go out and buy more guns and ammo.  The elites have actually created new organizations promoting firearm ownership highlighted by such groups as the Pink Pistols bringing in gay and transgender communities.  Or the USCCA Mom’s with Guns organization.  Whether these were started by the elites or not I know they have been supported by donations from elite front groups in order to sustain and grow their organizations.

MILITARIZATION OF OUR POLICE DEPARTMENTS!

Have you ever noticed that your local police departments now have military type equipment?  These sales to your local cop shops have been receiving grant money from the Federal government for purchases of military grade vehicles, weapons, electronic devices, hell even their uniforms have now taken on a more military look [despite many officers who are massively overweight].  All paid for by our government and of course we the people who pay for this totally unnecessary equipment. 

CORRUPTION OF OUR POLICE DEPARTMENTS

All of this Federal money ends up having a corrupting influence over our police departments.  Play ball with the Feds no matter how absurd and unnecessary their benefactors in Washington DC will continue to lavish you with money.  Plus in the communities these staged faked events takes place in order to pull it off officers must sign a non disclosure agreement thus silencing through large fines and very possible imprisonment in informing the public that this drill will be used for PROPAGANDA!

DIVIDE AND CONQUER

These and plus other non shooting propaganda events are all designed to have the American public to have something fight over.  Gun rights – gun control; gay rights – moral certainty; Republican – Democrats; Liberal – Conservative; men versus women; blacks – whites – brown – yellow – red all fighting each other. 

WHY??

WHILE WE ARE FIGHTING

THE ELITES ARE RIPPING US OFF!

DYI

8-1-19
Updated Monthly

Secular Market Top - Since January 2000

+130.4% Dow       

+248.5% Transports 

+188.6% Utilities

+  99.6%  S&P 500

+  96.7%  Nasdaq

+63.1%  30yr Treasury Bond

+399.2% Gold

+117.4% Oil
  +61.0% Swiss Franc's

    

From High to Low - Since Year 2000

+399.2% Gold

+248.5% Transports

+188.6% Utilities

+130.4% Dow
+117.4% Oil 

+  99.6% S&P 500 

+  96.7% Nasdaq  
+  63.1% 30yr Treasury Bonds

+  61.0% Swiss Franc's

December 1999 Shiller PE10 was 44.19               
August 2000 S&P 500 dividend yield was 1.11%  

Shiller PE10 8-01-19 is 28.99
S&P 500 dividend yield 8-01-19 is 1.96%
[Shiller PE10 & dividend yield is reported using data from the beginning of the month when I update.  It may or may not be exactly the first day.]

It is easily seen in the year 2000 the Nasdaq was horribly overvalued and gold was on the give away table, such lopsided returns 18 years later!

Also of interest the stodgy 30 year Treasury bond since the year 2000 outperformed the Dow, S&P 500 and Nasdaq until the Trump rally.  With valuations stretched to these lofty levels a value player such as DYI will once again place his monies in 30 year T-bonds or long term high quality corporate bonds out performing stocks over the next 10 to 15 years.  Please note due to the Fed's sub atomic low interest rates 30 year T-bonds or high quality long term corporate bonds will highly likely out perform stocks over the next 10 to 15 years with one big caveat; out performance will be losing far less money than stocks! Ouch!          

America Has Gulags in Its Own Backyard 

Plucking chickens for for-profit companies, caring for elderly patients without any training, and other forms of hard, uncompensated labor are sanctioned in the United States as court-mandated rehabilitation for drug-related charges. As the deficit of rehab care in the U.S. grew during the far-reaching opioids crisis over recent years, what are essentially work camps—

where detainees work for no money or face prison time, despite often not even being convicted of a crime—started to pop up all over the country.

 “The 13th Amendment,” Walter explains, “basically outlawed slavery in the United States. And it states that involuntary servitude is not OK, except as a punishment upon conviction of a crime. 

So, when you have participants who are getting sent by courts to these programs, ostensibly for rehab and treatment for their addictions, what lawyers have told us is there’s an argument that that violates the 13th Amendment. Because not only sometimes are there no convictions in these cases yet, but a lot of the time, even if there are convictions, the courts are saying: This is not for punishment. This is to rehabilitate you. This is to provide treatment so that you can recover from your addictions and become a productive member of society.”

 DYI 

Yields Drop

Precious Metal Surge

 

UPDATE 3-Yields across entire German bond market dip below zero for first time

LONDON, Aug 2 (Reuters) - Yields across the entire German government bond market dipped into negative territory on Friday for the first time ever, as investors scrambled to buy less risky assets after an escalation in the U.S.-China trade conflict. 

Germany’s 30-year bond yield briefly dropped more than eight basis points to -0.006%, its first fall below zero, and was last at 0.015%. It had been as high as 0.89% as recently as January. 

The yield on the benchmark German 10-year note marked new ground with a fall below -0.50 bps.

 Gold price surges

 Record high in 73 currencies

Gold hit a six-year high on Friday as investors piled into the safe haven metal amid an escalating US-China trade war, and the prospects of a return to ultra-loose monetary policy by the Fed.

 Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 08/1/19

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

68% - Cash -Short Term Bond Index - VBIRX

32% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

**Tocqueville Gold Fund TGLDX is a pure play 100% junior gold mining gold fund.  Vanguard's Global Capital Cycles Fund maintains 25% in precious metal equities the remainder are 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.

DYI

Opinion: Watch out, America: China and Russia are stockpiling gold

The yellow metal generates no cash, grows no crops, provides no shelter and supplies no useful service. It hasn’t been official money for decades. It isn’t any kind of “safe haven” because it always seems to be crashing or booming or crashing again. It hasn’t been an efficient way of verifying payment since Samuel Morse invented the telegraph. 

But here’s the funny thing: It’s been going up. Big time. And for none of the usual reasons. 

There’s no inflation. Prices are currently rising by about 1.6% a year.

DYI:  Bullshit statement #1.)  No inflation simply go to the Chapwood Index and you will see that prices have been going up at a scorching 7 to 10 percent.  All you have to do is ask either the elderly or young persons if pharmaceutical drugs are up in price or if college tuition has risen way beyond the general rate of inflation!

There’s no obvious economic distress. The U.S. economy is growing by about 2.1% a year.

Bullshit statement #2.)  If everything is so great why has the empire State Manufacturing Index fallen into recession territory along with the Chicago Business Barometer??  Plus the Feds are now lowing rates once again!  Ask any Millennial as to the job market.  Sure they can get a job but go and leave Mom and Dad?  Out of the question the job doesn’t pay enough unless they have multiple roommates.  So much for a great job market; that statement is total BS.

And there’s no financial panic. Stock markets are rising. Wall Street has been hitting new highs. Junk bond spreads — the extra interest that risky companies have to pay to borrow money — are low.  

Bullshit statement #3.)  This time I think I’m just going to go and throw up.  The stock market is way up in price for sure but that is the problem valuations have gone to the moon.  Future returns from here are going to be total crap just like your first two statements. 

The explanation? Some of America’s biggest geopolitical rivals were stockpiling gold. Especially China and Russia. 

And they still are. The People’s Bank of China recently revealed hiking its gold reserves by 74 tons in the six months through May. The Russian central bank has bought about 96 tons in the first half of the year. 

U.S. dollar hegemony 

And there’s an obvious reason for China to buy gold. It wants to break up the global hegemony of the U.S. dollar — the hegemony that former French President Charles de Gaulle called America’s “exorbitant privilege.” It wants to make its own currency, the renminbi, a world player. And Odey argues that buying gold bullion is a natural move. Gold reserves should add to world confidence in the Chinese currency.

OK now you’re talking…You bet the fastest way for Russia and China to throw off the paper monster (U.S. Treasury securities) IS massive gold reserves that can have their currencies converted into gold.  Once this platform has all of the bugs worked out countries within Russia and China sphere of influence will soon join ending the American dollar as the reserve currency of the world.  As I’ve stated before America will continue to be a powerful country but our days of bending any country in the world to our will we be finished [and thank God].
  

DYI

Bubble

News

The problem here is that, as of Friday July 12, 2019 our estimate of likely 12-year total returns for a 

conventional portfolio mix invested 60% in the S&P 500, 30% in Treasury bonds, and 10% in Treasury bills,

 has dropped to just 0.5%. 

A passive investment strategy is now closer to “all risk and no reward” than at any moment in history 

outside of the three weeks 

surrounding the 1929 market peak.

They’re Running Toward the Fire

Similarly, our “Exit Rule for Bubbles” is straightforward: 

You only get out if you panic before everyone else does. You have to decide whether to look like an idiot before the crash, or look like an idiot after it. 

Worse, investors often capitulate into panic selling only after their losses have become extreme. By then, it’s too late. It’s not the fire that gets them. It’s the heat. Once the warning signs are flashing, get out early. Attempting to squeeze the last bit out of a vulnerable, hypervalued market is what value investor Howard Marks describes as “getting cute.”

I continue to expect a market loss on the order of 60-65% over the completion of the current cycle. 

A 50% loss is a rather optimistic scenario, given that it would not even take valuations to the level we observed in October 2002, which was the highest level of valuation ever observed at the end of a market cycle. If our measures of internals were uniformly favorable, these full-cycle risks would remain, but we would defer our immediate concerns. It will remain important to monitor those internals, regardless of how extreme market valuations have become.

 DYI

%

Gold/Silver

Allocation

08-24-19

Updated Monthly

100 – [100 x (Current GS – Avg. GS / 4)

_______________________________________

(Avg.GS x 2 – Avg. GS / 2)

Current Gold/Silver Ratio 88

Average Gold/silver Ratio 50

Allocation:    

Gold      0%

Silver 100%

Average Gold/Silver Ratio since 1900

50 to 1

Gold and silver bullion buyers and traders use the fluctuating Gold Silver Ratio to better determine which precious metal may be poised to outperform the other.

The essence of trading the gold-silver ratio is to switch holdings when the ratio swings to historically determined extremes. So:

When a trader possesses one ounce of gold and the ratio rises to an unprecedented 100, the trader would sell their single gold ounce for 100 ounces of silver.

When the ratio then contracted to an opposite historical extreme of 50, for example, the trader would then sell his or her 100 ounces for two ounces of gold.

In this manner, the trader would continue to accumulate quantities of metal seeking extreme ratio numbers to trade and maximize holdings.

Note that no dollar value is considered when making the trade; the relative value of the metal is considered unimportant.

DYI’s averaging formula is best used when accumulating bullion.  Simply buy up to the stated allocation only selling/buying when necessary [lessen capital gains taxes].  For those in the distribution stage [retirees] of life sells off gold or silver to bring back in line with the current allocation.

DYI

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]

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: 1.10 (rounded)

As of  08-01-19
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 any amount greater than yearly salary.

PE10  ..........30.40
Bond Rate....3.30%

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

%
Stock & Bonds

Allocation Formula

08-01-19
Updated Monthly

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

Current PE10.....30.40

Avg. PE10......... 16.64

% 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