Subtrack the “Giant 5” and the US Stock Market Hasn’t Made Gains Since January 2018

For the entire rest of the stock market – all its winners and losers combined – minus the “Giant 5,” the period since January 2018 was a very rough and unpleasant ride to nowhere. It declined 1%. You would have been better off putting your money in one of those despicable freaking savings accounts:

“Wild Ride to Nowhere”: 

APPL, MSFT, AMZN, GOOG, FB Soar to New High. Rest of Stock Market is a Dud, Has Been for Years

Subtrack the “Giant 5” and the US Stock Market Hasn’t Made Gains Since January 2018

Among the losers in that rest of the market are companies that used to be the largest in the US stock market, such as Exxon-Mobile, which since January 26, 2018, has lost 48% of its value. The entire and once vast oil-and-gas sector has gotten crushed. 

The market, and broad portfolios, are immensely dependent on the Giant 5. That was great on the way up – on their way to becoming giants, when their share of the overall market doubled in three-and-a-half years, from 10% in January 2017 to nearly 20% today. 

But if they sell off – there are myriad reasons why giants sell off, as all prior giants have found out – the impact of these five companies is going to be proportional to their giant size.

DYI:  While stocks on a broad basis continue their ongoing bear market there is one sector that I’ve mentioned many times before; OIL!  When an investment class appears to be terminally ill as illustrated by Vanguard’s Energy Fund symbol VGENX average annual return for the last ten years is – drum roll please – negative -0.66%!  This is not a jab at Vanguard, all energy funds have had dismal returns over the last 10 years.  However this industry – despite all of the rhetoric – is NOT going into the dustbin of history.  Contrarian thinkers know that nothing is forever; energy companies’ stock prices are at bargain prices.  Vanguard’s energy fund current yield – 4.81% - is typical of many other energy based mutual funds.

Since the Year 2000

From High to Low - Since Year 2000

+ 521.7% Gold

+ 208.1% Transports

+ 170.9% Utilities

+ 124.5% Dow
+ 147.2% Nasdaq
+ 111.0% S&P 500
+  78.4% 30yr Treasury Bonds

+  66.7% Swiss Franc's

+  53.4% Oil 

Easily seen the price of oil compared to these vastly different asset categories has now reached the bottom.  Dollar cost averaging would be the recommended way to go if you have this asset category in your 401k.  If not go to Vanguard – or any fund group of your choice – and begin purchasing shares directly.

Till Next Time

DYI

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.

COVID

HOAX CONTINUES!

From the Desk of

Miles Mathis 

Court ruling was being reported in the mainstream press in Illinois, where a Circuit Court has thrown out the Governor's executive orders on Covid as null and void, and also as grossly unconstitutional.* 

Confirming what I say about Covid above. The ACLU** was not involved in the suit. It was brought by State Representative Darren Bailey, but applies to all citizens of Illinois. Despite that, the Chicago Tribune and other mainstream media outlets are reporting today that all these voided orders will be enforced during the July 4 holiday. In other words, the fascists are simply ignoring this judge's ruling, pretending it didn't just happen. Which is again grossly illegal and unconstitutional.  

The Tribune says:  

Mayor [of Chicago] Lori Lightfoot had a sharp warning for bars and restaurants that do not follow the guidelines:  

“If you squander this opportunity, we will shut you down and you will not reopen anytime soon,” the mayor told holders of liquor licenses during a conference call this week.

DYI:  Apparently mayor of Chicago Lori Lightfoot fancies herself as dictator in charge. 

Like Governor Pritzker, this Mayor Lightfoot seems to have a poor understanding of the law, and of the English language. She apparently can't read a simple ruling from a judge. Her threat is null and void, and she has just opened herself up to a lawsuit for harassment and Civil Right violations, as has the Chicago Tribune. 

Citizens of Illinois should not only mob the parks and beaches, ignoring all social distancing rules, all businesses should immediately reopen, including bars. Anyone arrested or hassled in any way by police should sue the city, the state, and the Chicago Tribune.  

Harassing citizens with illegal orders by spreading fear is highly illegal itself, being the very definition of Civil Rights violations. 

Your primary right as a US citizen is to be free of illegal orders. The government threatening you with bankruptcy or other violence is harassment, pure and simple, and whether or not you are actually arrested is beside the point. You have already been harassed simply by listening to these empty threats from the Governor, the Mayor, and the media. Just by reading the newspaper or the story on the internet, you have standing for a lawsuit, since you have thereby been harassed by your government. 

Actually, on closer reading, it appears the Mayor's “sharp warning” came before the court ruling, which may mean it is only the Chicago Tribune spreading confusion, fear, and misinformation on purpose.

DYI:  The mayor knowing full well that the judge’s ruling was soon to arrive at her doorstep attempted [successfully] to head off a negative ruling.  

That paper is publishing this sharp warning after they have published the court ruling, so they should know the sharp warning is null. But they are pretending not to know that, and hoping you don't notice. As more indication of that, we see that the paper has lifted the paywall on this article, hoping it will be read by as many as possible, and that they will mistakenly believe Mayor Lightfoot's sharp warning is still in effect.

Illinois Governor Pritzker is defying this court order, hiring his people in the media to spread false information stating the ruling does not apply to all of Illinois. The media is reporting that he planned to appeal on Monday, which was yesterday, but he didn't. In fact, he has already previously tried to appeal to the Illinois Supreme Court on this case more than a month ago, and lost. But even if he did appeal, he is expected to follow the ruling until and unless he wins the appeal. Legally, you cannot just ignore a court order, even if you are the Governor. Illinois media is trying to blackwash this judge by leading every story by calling him a “downstate” judge. There is no such thing as a downstate judge. A judge is a judge, and you can't legally respond to a court order by slandering the judge. In other stories, fake legal experts are hired to tell you there is confusion here, but there is no confusion except the confusion they are being hired to spread. They themselves should be sued for spreading false legal information, since they are clearly doing it with malice to US law. This is just more proof the legal system doesn't apply to the fascists actually running the country. They do whatever they want, including ignoring court orders. They then hire people to lie in the media. 

But some good news: the Wisconsin Supreme Court struck down Governor Tony Evers' executive orders way back on May 13. 

The Supreme Court of Wisconsin ruling plays in here, because the ACLU got involved, coming in on his side against you. They sharply criticized the Wisconsin Supreme Court for upholding the Constitution, and expecting Wisconsin government to work through its legislature. 

Evers also lost his bid to postpone the primary election in April. The Wisconsin Supreme Court slapped him down. That didn't work in Ohio, where Governor Mike DeWine, another creepazoid, defied a court order and closed the polls back in May anyway.

He later lied in the press outright, saying “It was not a specific court order”. Except that it was. And Trump let him do it. Trump could have ordered the National Guard sent in to enforce the court order, as they did back in the 50s and 60s to force Governors in the South to obey the law. He didn't. He just waffled, saying closing polls illegally “wasn't very good”. 

DYI:  So much for Trump being the great savior he could have sent Federal Troops immediately to enforce the Judge’s ruling. 

Please note I’m not here to condemn Trump both political parties are left and right wing FASCIST’S!  Don’t get caught up in the left, right, Republican, Democrat divide and conquer having vast portions of our citizens wasting their time and effort thus exhausting themselves.  This huge distraction is just that a “distraction” while the elites raid the treasury.  

But anyway, as it turns out, Wisconsin is also ignoring its own Supreme Court, since starting July 1, Dane County (Madison) shut down the bars again on order of the local health department. As if the local health department can trump the State Supreme Court, or overrule them. It is unclear to me why bar owners in Madison are following this illegal order. They should just reopen and tell the health department to go soak its head. If fines are assessed, they should refuse to pay them. There is no way the police are going to shut down these bars by force given a Supreme Court ruling against them. The police are sworn to uphold the Constitution, so they should be shutting down the Madison City Council and the Mayor's Office by force.  

These cases like the one in Wisconsin are also being spun by liars, who are saying the judges are politically motivated, are legislating, and are overstepping authority. All that is just an obvious reversal.

 It is the Governors who are guilty of all that, and the judges are simply trying to prevent this astonishing overstep by the executive. 

That is clear as a bell to anyone awake. 

 And yet we know the media is flush with these paid liars, who are happy to turn the truth on its head for a small paycheck. For them, as for the Bushes, the Constitution is “just a goddamn piece of paper”.*** Anytime it gets in their way they just ignore it, or spin it 180 degrees by lying right to your face.  

Why are Governors making laws? Because the State Legislatures are supposed to be direct representatives of the people, and apparently they don't feel these laws are necessary. So they are just being bypassed. 

It is much easier for Bill Gates and the Federal Reserve to buy off 50 Governors than to buy off thousands of State Senators and Representatives, so that is what we are seeing.

We are seeing legislatures mothballed in favor of fascist and illegal rule by Governors. They are simply pretending Governors have this authority, though they do not. The media tells you the Governors and Mayors have this authority, when they do not. It is basically a big bluff, but if you believe it and act on it, it is all the same. At that point they have you. If you will obey illegal orders, then they can just dispense with the law and the Constitution, ruling you through fear and bluff. If you will do anything you are told with no laws to back it up, you are then what? A SLAVE. Not just like a slave, but a slave by the definition of the word. If you are ruled by fear and force, with no laws and no representation by a legislature, you are a slave. Period.

In fact, you are even lower and more ignorant than any slave, since you have just been ruled with no force applied. 

You have obeyed not because someone had a gun to your head or a whip to your back, but because you were fooled by some jackass university writer or talking head on the news, who lied right to your face and convinced you it was patriotic to act like a slave. 

There is little shame in being a slave by force—as with a plantation slave before the Civil War—since your ability to resist is small. But your shame could not be greater, since you have accepted your little cage with no force applied, and no attempt to resist. You have agreed to your own enslavement, and you are foolish enough to feel superior for it. I honestly don't know who is more despicable: those who rule this way, or those who are ruled this way. 

*  Judge voids Gov. Pritzker’s COVID-19 executive orders

**  Miles Mathis article is primarily about the ACLU.
*** Bush – Constitution ‘Just a Goddamned Piece of Paper’

DYI

The

Ongoing Covid-19

HOAX!

The Fake Revolution 

by Miles Mathis 

First published July 5, 2020 

Things are getting so weird I thought I should pop on this page to talk you down from the tree again. I have told you most of these things before, but they need repeating. 

To prep myself for this paper, I watched a number of recent Tucker Carlson episodes, so that we have both sides of the current manufactured uprising in our sights.  We are seeing many politicians from both parties and all levels bowing before Black Lives Matter, as well as FBI agents and police. All this is very prominent in the news, and I don't need to list examples.  If you are awake you know of it, probably better than I do (I don't even bother to watch it, because I know it is fake).  On the other side we have a few people like Carlson, framing this as a Democrat v. Republican issue.  Some of what he is telling you is true, but mainly he is playing the other side, making sure white people are properly astonished and threatened and diverted. 

I will give you a few examples of how Carlson is spinning. As part of his job to frame this as Democrat v. Republican, or liberal v. conservative, see his segment on how Chris Cuomo got into Yale. It is clever in parts, and mostly true, except for one thing. He says that these rich kids of Democratic politicians are getting byes into Harvard, Yale, Stanford, and Georgetown, which is true. But it is also true of Republican politicians. Remember George Bush, Jr.? He went to Yale, you know. Was he a liberal Democrat? Not last time I checked. Was he a top student? You have to be kidding me. Same for Trump, who got a bye into Wharton.** The truth is, it is the Republican party that was for decades the party of greatest privilege, and that hasn't changed. What has changed is that the Democratic party is now just as privileged. They are both parties of privilege, wealth, and incredible lies. They sometimes tell the truth about one another, but they never tell the truth about themselves. 

In the current blow-up, Carlson is against BLM, but that is not his main function. His main function is to be sure the race wars are properly salted in. 

This will cause you to go out and buy more guns, enriching the usual billionaire suspects in both parties, who bought out all the gun companies after 911. 

It will cause you to fear your neighbors even more, giving you yet another reason to stay in the house and make no alliances. 

But mostly, it will keep your eyes off the real things going on just beyond your line of sight.

DYI:  Sandy Hook staged faked event [December 14, 2012] was the “kick off” for all of the faked shootings or faked bombing events.  The cry for gun control was immediate – that has never materialized to any significant degree – was highly effective in mobilizing present and future gun owners to purchase massive firearms and ammo along with all types of related weapons.

Also of note in 2012 [effective July 2, 2013] was the repeal of the Smith-Mundt Act thereby allowing government sponsored news – or more commonly known as PROPAGANDA.  Any wonder we have now gone off to the races with non-stop propaganda events.  This has created a cottage industry that demands to be financially fed on an almost daily pace. 

Back to Miles Mathis:

That's right, I repeat again that all these riots are being manufactured by the CIA and other agents, as a huge diversion. 

Job one right now for the billionaires and trillionaires is keeping your attention away from the gargantuan theft from the treasury that took place this spring.

A theft so large it makes the previous largest theft in 2007-8 look like a 7-11 burglary. 

The fake Covid scare was manufactured as the primary cover for that theft, since they wanted you so worried about the health of yourself and your children and old parents or grandparents you forgot to notice you had just been robbed blind again by the same people as before. 

But they soon discovered they had miscalculated. 

Many people saw through both scams, and the governors realized there was some danger of a real uprising against both the theft from the treasury and the Covid hoax. 

DYI:  Absolutely true!  A growing number of our citizens were coming to grips that this was nothing more than a hoax all designed to rob massive amounts of money from the treasury through the stimulus legislation.  The stage riots unfortunately put a stop to those from growing and remains so despite the ending of the demonstration. 

 Back to Miles Mathis: 

 So they ordered a large percentage of their agents worldwide to drop the Covid hoax for a few weeks, and to switch to a massive fake uprising on race. 

They have long had these race wars waiting in the wings for just such a time. They knew that if things began to get testy for the bankers, they could always hide behind manufactured race wars. 

They have done it many times before. That's one reason J. Edgar Hoover wanted to keep Africans here rather than sending them back to Africa in the 1920s and 30s. Yes, he wanted to use them as cheap labor, but he also wanted them here as a card he could always play, as now. The CIA learned from him and took over most of his tricks in the 1960s and 70s. 

Therefore, anyone not pushing your attention back to the theft from the treasury right now is misdirecting you. 

Period. Anyone trying to scare you with some other storyline is diverting you. END OF STORY. Anyone pushing BLM or Covid or #Metoo or Qanon or pedophiles or 5G or aliens or anything else is either an agent or an idiot, and probably the former. 

So you should ask yourself if this whole BLM storyline makes any sense. Why would blacks choose this time of all times to riot in the streets? Were racial tensions especially high last year or in the early part of this year? No. They were remarkably low. Does a pandemic lockdown seem like a good time for the Black movement to come alive? No. Just the reverse. So the timing of this should look very suspicious to you. Just when the governors most needed a diversion, the Black movement was there to provide it. That's very convenient, don't you think?

Also convenient are the BLM leaders' top talking points. Why would the Black movement lead with defunding police departments? Does that make any sense? No, none of this makes any sense, either from the position of blacks or whites. Why would they lead with tearing down statues? Statues!? Do you really think statues would be a top priority for blacks? If I were black and was pushing for change, about the last thing I would be worried about is statues. 

If you can't figure it out, I will tell you. This is all a script written by superwealthy whites, and it is written to push certain buttons in the white majority.  It is all about creating fear and division, and they know what scares you and maddens you.  They need easy visuals, and a Columbus statue with red paint thrown on it is perfect for that. George Washington and Abe Lincoln and Teddy Roosevelt taking a big tumble into a vat of acid is perfect for that.  

Same goes for defunding the police. No real blacks want that, since they rely on police protection as much as you do, or more. But they need people to be afraid we are devolving into chaos, since nothing gets the blood pumping more than that. Nothing will get your mind off the trillions they just stole from the treasury and the shredding of the Constitution during the lockdown like the fear of race wars with no police. 

But I assure you none of that is going to happen. 

It is all a bluff. 

The chance of police being defunded is. . . absolute zero. 

If anything, they will use this to increase funding of police and military. You will be so scared by this near miss you will demand more police and more military. Just watch and see. 

Nor will they outlaw guns of any kind. They always say they will, but they never do. Why? Because this isn't about taking your guns. It is about selling you more. 

I repeat, it is all fiction. You are watching a scripted and heavily funded movie. They have hired literally tens of thousands of paid actors to fill the streets, and that includes all these BLM people, the Antifa people, the fake cops in fake uniforms, and the thousands of CIA and FBI agents, many of them in disguise. It includes the politicians and media people, who are just actors themselves, including governors, mayors, congresspeople, and the talking heads on the news. It includes both Chris Cuomo and Tucker Carlson. It includes Jacob Frey reading from scripts on the street in Minneapolis, Nancy Pelosi kneeling in Washington, Alexandria Ocasio-Cortez emoting on youtube or facebook, DC Mayor Muriel Bowser renaming streets there, and Stacy Abrams* creating division in Atlanta. It even includes Prime Minister Justin Trudeau and President Trump, who are also actors. They weren't elected, they were installed by the CIA, to fill their roles. You have nothing to fear, because none of it is real. 

You will say, what do you mean it isn't real? I have seen it with my own eyes! These people are doing things! What isn't real about it? 

Well, you also saw Star Wars with your own eyes. And yes, real things were happening. Real actors were on real sets running around and doing a lot of things. They said real words and were paid real money (mostly). Things exploded and burned. There were crashes and loud noises. So the current events are real in that sense. They aren't CGI (for the most part) and they aren't in front of green screens (for the most part). They are burning down a few buildings and toppling a few statues. 

But as an artist, I have news for you: a lot of those statues they are destroying aren't real. In some cases they have brought in duplicates or fakes. It is easy to make a duplicate: you just make a mold and then paint it to look like bronze. They do it for movies all the time. And besides, you can't harm bronze with a little red paint or by kicking it. The paint washes right off, and this is metal: you would have to melt it down. That isn't being done. So they can easily reinstall the statues later. They may be using these fake events to steal the statues, but they certainly aren't destroying them. You can be sure the bankers won't allow anything of real value to be destroyed. 

So, ironically, what you most have to fear is not black people stealing your Downtown Abbey collection or your golf clubs. It is not dying of some new plague invented by Bill Gates. It is not that the police will no longer be there to tell you bicycles don't belong on the street or to try to steal your car for unpaid parking tickets. What you have most to fear is that you can no longer tell reality from fiction, or a lie from the truth. And that you therefore no longer have any basis for saying no.

*Don't you find it curious this black lady's name is Abrams? That is a top Jewish name, you know. Tucker Carlson even gives you the hint in his segment on her, joking that she will start “the world's 4th great Abrahamic faith.”  

**Wikipedia now admits it was erroneously reported in the New York Times that Trump graduated first in class from Wharton, when in fact he didn't even make the honor roll. In 2015, Trump's attorneys threatened legal action if either Fordham University or the New York Military Academy released his transcripts. Do you think they would have done that if the transcripts were glowing?

 DYI

Moon Mining Could Begin As Early As 2025

DYI:  The world and certainly the U.S. does not have the technology to start mining the moon.  And by now I would hope most learned individuals realize that the original moon landings were a stage faked event all for propaganda purposes AND to rip off the American taxpayers to the tune 52 billion [152 billion today’s dollars] on top of the on going Vietnam war [168 billion total cost today’s dollars 1 trillion]. 

Simply put a long and ongoing rip offs of our citizens wealth into the hands of the elites.  We are enduring big pharma’s rip off of the Corona COVID -19 HOAX for their roll out for a mass vaccine.

Noticed how all of the staged faked mass shootings have conveniently stopped during our COVID HOAX?  Maximize TV time for COVID.  The staged faked mass shootings are designed to scare the hell out of the gun owners with possible gun control encouraging gun and ammo sales.  Plus corporate sales reps have besieged our public and private schools attempting to sell all types security devices and services for our schools [94,500 school districts, 14,000 colleges/universities].  All for big business and the elites who own vast percentages of these companies as a rip off of the American taxpayer – YOU & ME!

Till Next Time

DYI  

Ben Graham's Corner

The

Bubble has Returned!

DYI:  Investing when known where to find the data is a straight forward and simple affair.  Those holding or purchasing stocks today on a wholesale basis such as a S&P 500 index fund or a broad based managed stock fund commonly found in a majority of 401k’s can expect a total annual return over the next 20 years – drum roll please – 3.76%!  This calculation estimation [surprisingly close to actual returns] – can be found by going to moneychimp.com for predicting future returns.  All you have to do is plug in the current Shiller PE and current S&P 500 dividend yield all found by going to multpl.com.  This takes about 2 minutes of your time but will make a world of difference in your long term return of your personal finance.

Mortgages

Most mortgages today such as a 30 year FHA annual percentage rate is around 3.80%.  Depending on how many years remaining this is a straight forward comparison.  Say you have 25 years to go and compare the estimated return for the same amount of time.  Should you make additional mortgage payments or put your money into stocks?  Back to moneychimp.com plug in the numbers for 25 years and today’s valuations here is what we get for our hard earned dollars.  4.38% as compared to 3.80% [or whatever your mortgage rate is].  So…Stocks are the better deal – expect one hell of a roller coaster ride – surprising despite insane valuations due to sub atomic low interest rates powered by Fed intervention equities remain the better deal.   

Side Note

Ben Graham’s Corner has stocks safe for dollar cost averaging.  His simple arithmetic is a comparison between bond returns or stocks.  Again due to MASSIVE Fed intervention interest rates are incredibly low thus stocks are the better deal [even though future stock return remain dismal at best!].      

   

Ben Graham's Corner

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: 1.51(rounded)

As of  7-1-20
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  ..........29.07
Bond Rate...2.51%

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

DYI

Oregon county revises face mask order exempting non-white people

Facing a torrent of “racist commentary,” Oregon’s Lincoln County has amended its exemption of non-white people from a new order that requires face coverings to be worn in public, according to a report.

DYI:  There isn’t anything I can add besides "INSANE!”

DYI 

7-1-20
Updated Monthly

Secular Market Top - Since January 2000

+124.5% Dow       

+208.1% Transports 

+170.9% Utilities

+111.0%  S&P 500

+147.2%  Nasdaq

+ 78.4%  30yr Treasury Bond

+521.7% Gold

  +53.4% Oil
  +66.7% Swiss Franc's

    

From High to Low - Since Year 2000

+ 521.7% Gold

+ 208.1% Transports

+ 170.9% Utilities

+ 124.5% Dow
+ 147.2% Nasdaq
+ 111.0% S&P 500
+  78.4% 30yr Treasury Bonds

+  66.7% Swiss Franc's

+  53.4% Oil 

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

Shiller PE10 7-1-20 is 29.07
S&P 500 dividend yield 7-1-20 is 1.92%
[Shiller PE10 & dividend yield is reported using data from the beginning of the month when I update.  It may or may not exactly be the first trading day of the month.]

It is easily seen in the year 2000 the Nasdaq was horribly overvalued and gold was on the give away table, such lopsided returns 19 years later!
DYI

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 7/1/20

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

62% - Cash -Short Term Bond Index - VBIRX

38% -Gold- Global Capital Cycles Fund - VGPMX **

 0% -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.  

 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.

%
Stock & Bonds

Allocation Formula

7-1-20
Updated Monthly

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

Current PE10.....29.07

Avg. PE10......... 16.72

% Stock Allocation   1% (rounded)
% Bond Allocation 99% (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

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: 1.51(rounded)

As of  7-1-20
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  ..........29.07
Bond Rate...2.51%

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