The Fed's interest policy is on stall neither up or down just remaining at current rates. It appears to me nothing is going to happen in any meaningful way until the U.S. economy turns down into recession. Stocks continue in the bull pen waiting for valuations to achieve investment merit. In other words "The Great Wait Continues!"
Updated Monthly
AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 11/1/23
Active Allocation Bands (excluding cash) 0% to 50%
24% - Cash -Short Term Bond Index - VBIRX
49% -Gold- Global Capital Cycles Fund - VGPMX **
27% -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.
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]
Lump Sum any amount greater than yearly salary.
PE10 .........28.97
Bond Rate...5.98%
EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate
1.75 plus: Safe for large lump sums & DCA
1.29 or less: Mid-Point - Hold stocks and purchase bonds.
1.00 or less: Sell stocks - Purchase Bonds
Current EYC Ratio: 0.63(rounded)
As of 11-1-23
Updated Monthly
Bond Rate is the rate as reported by
DCA is Dollar Cost Averaging.
Lump Sum is any dollar amount greater than one year salary.
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
%
Stocks & Bonds
Allocation Formula11-1-23
Updated Monthly
% Allocation = 100 x (Current PE10 – Avg. PE10 / 4) / (Avg.PE10 x 2 – Avg. PE10 / 2)]
Formula's answer determines bond allocation.
% Stock Allocation 3% (rounded)
% Bond Allocation 97% (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. Smart Money - Buys Aggressively!
Capitulation
Despondency
Max-Pessimism
Depression
Hope - Silver F
Relief *Market returns to Mean - Short Term Bonds & MMF
Smart Money - Buys the Dips!
Optimism - Gold
Media Attention
Enthusiasm
Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism
Denial of Problem - Stocks
Anxiety
Fear
Desperation - Long Term Bonds
