Despite the Fireworks in High Tech No Change from Last Month!

 

Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 2/1/25

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

30% - Cash -Short Term Bond Index - VBIRX

45% -Gold- Global Capital Cycles Fund - VGPMX **

 25% -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.  

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  .........38.07
Bond Rate...5.35%

EYC Ratio = 1/PE10 x 100 x 1.1 / Bond Rate

2.00+ Stocks on the give-away-table!

1.75+ Safe for large lump sums & DCA

1.30+ Safe for DCA

1.29 or less: Mid-Point - Hold stocks and purchase bonds.

1.00 or less: Sell stocks - Purchase Bonds

0.50 or less:  Stock Market Crash Alert!  

Purchase 30 year Treasury Bonds! 

Current EYC Ratio: 0.54(rounded)

As of  2-1-25
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 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 Formula

2-1-2025
Updated Monthly

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

Formula's answer determines bond allocation.

Current PE10.....38.07

Avg. PE10...........17.20

Core Bond Allocation:  131% 

% Stock Allocation     0% (rounded)
% Bond Allocation  100% (rounded)

Current Asset: 

Vanguard Long-Term Investment Grade Bond 

Fund   

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.

Current Allocation:

Vanguard Long Term Investment Grade Bond Fund

Possible Allocations to Bonds vs Stocks:

Bonds %

100%+  Vanguard Long Term Investment Grade Bond Fund 

99% to 65% Wellesley Income Fund

64% to 35% 1/2 Wellesley Income Fund - 1/2 Wellington Fund

34% to 0%  Equity Income Fund

  

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

The Medical Industrial Complex is Ramping Up the Fear Campaign AGAIN!

 VIDEO

Dr Sam White on the Medical Mafia

Dr Sam Bailey Oct 8 Dr Sam White had been a General Practitioner in the United Kingdom for over a decade when the COVID-19 show was launched in 2020. His refusal to participate in rituals such as face masking soon attracted the attention of unquestioning colleagues and then the medical “authorities”. Not deterred, in early 2021 he recorded a video that went “viral” with millions of views as he exposed the vaccine rollout scam. Like me, Sam renounced his medical license and in parallel with my experience, the General Medical Council kept him on the medical register in order to stage a kangaroo court. Again like me, Sam had no interest in participating in such a ridiculous spectacle. A few weeks ago he was ‘struck off’ so I caught up with him to find out what happened and why we are both a major problem for the controlled and dangerous medical establishment. Dr. Sam (UK version) also explained how a personal health crisis led him to move away from allopathic medicine and into a more holistic approach through functional medicine. This included waking up to the widespread perversions of the pharmaceutical industry and becoming an evidence-based “anti-vaxxer”. Despite the gravity of the current situation, he retains a sharp sense of humor. Additionally, this unshakeable and authentic physician continues to show what must be done to end systemic corruption.

 

$101,915

Average American Debt Level!

DYI:

If you find yourself in a Financial Hole

Stop Digging!

The current personal debt crisis in the United States is concerning. As of 2024, the average American carries approximately $101,915 in total personal debt, which includes liabilities such as credit cards, student loans, and auto loans​. Recent data indicates that about 36% of Americans have increased their debt in the past few months, with 34% reporting that they carry over $10,000 in consumer debt​. With rising costs and economic uncertainty, nearly half of adults have struggled to make timely bill payments, and a significant portion anticipates using credit cards for essential purchases, especially during the holiday season​.

Credit card debt, in particular, has become a significant concern. The average American now carries around $6,271 in credit card debt, a figure that has been steadily rising as consumers increasingly rely on credit to manage everyday expenses. The Federal Reserve reported that total credit card debt reached $1.03 trillion, the highest level on record​. This surge in credit card debt can be attributed to a combination of factors, including inflationary pressures and the rising cost of living, which push consumers to borrow more just to keep up with basic needs. Consequently, many find themselves trapped in a cycle of high-interest repayments, making it increasingly difficult to achieve financial stability​. 

The following are the common types of personal debts:

1. Mortgage Loans

• Yield Range: 2-7% annually
• Features:
  • Mortgages tend to have the lowest interest rates among personal loans, especially with a fixed-rate, 30-year term.
  • Interest may be tax-deductible.  DYI:  More than just a rule of thumb; a lifesaver making a house a blessing instead of a curse, 15 year mortgage, loan amount no more than 2x gross income**, and pay down as many points as the mortgage company will allow.  **Soon to be millionaires always shoot for 1.5x times income and yes you will have to save up for the down payment to achieve this criterion.

2. Credit Card Debt

• Yield Range: 15-25% annually
• Features:
  • Credit card debt has one of the highest interest rates, quickly accumulating if not paid off monthly.  DYI:  If you always find yourself running balances (hence being charged close to loan shark rates) switch to only using your debit card or go old school using cash!

3. Car Loans

• Yield Range: 4-10% annually
• Features:
  • These loans usually come with fixed rates over a term of 3-7 years.
  • Cars depreciate quickly, which makes financing them costly in the long run. DYI: Buy used cars in cash and save yourself huge dollars.

4. Student Loans

• Yield Range: 4-8% annually
• Features:
  • These loans often come with favorable repayment terms, including deferment and income-based repayment options.  DYI:  Depending on the amount - if relatively small make a rapid payoff - if large then structure your repayment over a 5 to 10 year time frame.  Many doctors take 15 years to retire the debt due to insane educational costs. 

5. 401(k) Loans

• Yield Range: Prime rate + 1% to 2% (e.g., if the prime rate is 7.5%, the loan's interest rate will be 8.5% to 9.5%).
• Features:
  • Repayments consist of principal and interest, typically made monthly or bi-weekly via payroll deductions.
  • Interest repaid goes back into your 401(k), effectively "paying yourself."
  • No credit checks or third-party lender involvement.
  • Reduces the growth potential of your retirement savings during the loan period.
  • Leaving your job could require repaying the balance as a lump sum, typically within 60 to 90 days. Failure to do so may result in taxes and penalties.
  • Best used as a last resort to avoid jeopardizing long-term retirement goals.  DYI:  Borrowing money out of your 401k is a dead last resort - never your go to source of money this is for retirement when your working years have ended!

6. Other Personal Loans

• Yield Range: 6-15% annually
• Features:
  • These loans tend to have higher interest rates than secured loans like mortgages but lower than credit card debt.

Smart rules of thumb to manage these various types of debts:

• Pay Off High-Interest Loans First

  • Example: It's a no-brainer to first manage your credit card debt that obviously has the highest interest rate! If you have a credit card debt with a 20% APR and a car loan with a 6% interest rate, prioritize paying off the credit card to save on interest costs.

• Consider Loan Advantages

  • Example: A 401(k) loan allows you to repay yourself with interest, which can be more advantageous than taking out a personal loan with higher interest rates. Similarly, some mortgages or student loans offer tax benefits worth retaining.

• Refinance to Lower Interest Rates

  • Example 1: Switch your credit card debt to another credit card debt that has lower interest rate or borrow from your 401(k) to pay off the highest interest rate credit card debt if necessary!
  • Example 2: If you're repaying a 10% personal loan, consider consolidating it into a 6% home equity loan to lower your interest expenses.

Growth Stocks

VS

Value Stocks

Current underperformer: Value

DYI:  Here is a method for those who have high tolerance for a portfolio 100% invested at all times.  For those who are young enough with at least 2 decades and 3 is preferred; who are obviously in the accumulation stage of life.

Two Vanguard Funds:

1.) Growth Index Fund

2.) Value Index Fund

The accumulation of savings is the fund that is UNDERPERFORMING!   When your underperforming fund becomes the new winner you now direct your savings into the old winner neither fund is ever sold.  That’s it!

Whether or not this method will outperform the S&P 500 index is unknown, however it does make common sense buying the bargain as compared between the two funds – growth vs value.  

10 year estimated average annual return NEGATIVE 2%!

 

Only after the speculative collapse

does the truth emerge.

There can be few fields of human endeavor in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present. Only after the speculative collapse does the truth emerge.

-John Kenneth Galbraith, A Short History of Financial Euphoria, 1990

On Friday December 6th, the U.S. stock market pushed to the most extreme level of valuation in U.S. history, based on the measures that we find best-correlated with actual subsequent 10-12 year S&P 500 total returns, as well as the depth of subsequent losses over the completion of market cycles across a century of data. That’s not a forecast. Rather, it’s a statement about current, measurable, observable market conditions.

John P. Hussman, Ph.D.

14th Amendment to the U.S. Constitution: 

Civil Rights (1868)

AMENDMENT XIV

Section 1.

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Section 2.

Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed. But when the right to vote at any election for the choice of electors for President and Vice-President of the United States, Representatives in Congress, the Executive and Judicial officers of a State, or the members of the Legislature thereof, is denied to any of the male inhabitants of such State, being twenty-one years of age, and citizens of the United States, or in any way abridged, except for participation in rebellion, or other crime, the basis of representation therein shall be reduced in the proportion which the number of such male citizens shall bear to the whole number of male citizens twenty-one years of age in such State.

Section 3.

No person shall be a Senator or Representative in Congress, or elector of President and Vice-President, or hold any office, civil or military, under the United States, or under any State, who, having previously taken an oath, as a member of Congress, or as an officer of the United States, or as a member of any State legislature, or as an executive or judicial officer of any State, to support the Constitution of the United States, shall have engaged in insurrection or rebellion against the same, or given aid or comfort to the enemies thereof. But Congress may by a vote of two-thirds of each House, remove such disability.

Section 4.

The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void.

Section 5.

The Congress shall have power to enforce, by appropriate legislation, the provisions of this article.

 

Vanguard Mutual Funds Founder

The Late Jack Bogle’s 10 Investment Principals

With DYI’s Commentary

1.)  Reversion to the mean

Over time, the market will return to its average, so it's not a good idea to pick funds based on yesterday's winners.

DYI:  Chasing the latest hot performing fund is prescription for long term poor performance as what invariably occurs a misstep will happen driving down the return back to the long term average of the market in general (and possibly worse).   

2.)  Time is your friend

Start investing early, stick to a plan, and don't pay attention to daily market news.

DYI:  I actually advocate young people to save as much money for retirement to the exclusion of purchasing their first house.  Why?  Time is your friend when you are young and your enemy when you have passed the 40 year old mark.  Simply more time to compound and more you are able to put in early will help tremendously before all the costs of household formation comes into play.

3.)  Buy right and hold tight

Once you've set your asset allocation, don't change it based on market fluctuations.

DYI:  John Bogle does mention in his book – Bogle on Mutual Funds 1994 – Chapter Twelve – The Allocation of Investment Assets beginning page 235 – changing your allocation between stocks to bond ratio.  His determination for any change is based upon – drum roll please – VALUATIONS!

See DYI's Benjamin Graham Corner

 https://dividendyieldinvestor.blogspot.com/p/ben-ii.html 

4.)  Realistic expectations

Returns in the coming decade are likely to be lower than in the past.

DYI:  Once again – as of 12-9-2024 – the U.S. Stock Market is so severely “jacked up” returns going forward over the next 10 years will be sub atomically low (less than the rate of inflation) or outright losses depending on your allocation.   

5.)  Buy the haystack

Instead of buying individual stocks or stock funds, invest in broad-based index or exchange-traded funds to reduce risk.

DYI:  I don’t see the need for any more than three funds at the maximum nor is it required.  If a very conservative investor or due to insanely high valuation the Vanguard’s Wellesley Income Fund – (35% stocks – 65% bonds) – will do just fine.   

6.)  Minimize fees

Invest in low-cost, low-turnover funds to increase your return.

DYI:  After looking at 401k plans till I’m blue in the face I’ve come to the conclusion the best thing to do is only the match after that set up with Vanguard an automatic method of investing.  Why?  The vast majority of these corporate plans have 2% expense ratio as compared to Vanguard’s S&P 500 index fund at 0.04%!  That is a 98% decline in costs to run the fund!  Vanguard’s Wellesley Income Fund (non-index)** expense ratio is 0.16%!    

7.)  Risk is unavoidable

There's no wealth without risk, so you should save and invest for retirement to avoid depleting your savings with inflation.

DYI:  Inflation is the biggest tax that you will pay even beyond death.  Funeral costs have soared right in line with inflation! 

8.)  Don't fight the last war

Avoid the temptation to sell when markets fall and buy when they rise based on your emotions.

DYI:  Individuals who are very risk adverse then the Wellesley Income Fund is their only fund of choice no matter what the current valuation level is.  If it is this fund as compared to doing nothing at all the choice is obvious.  

9.)  Skepticism towards active management

Bogle was skeptical of active management strategies, which often promise high returns based on the manager's skill.

DYI:  Over broad periods of time measured in decades your asset allocation – stocks, bonds, or gold/silver if invested based upon correct use of valuation will out perform any hot manager past or present (except for late Benjamin Graham or Warren Buffett).     

10.)  Simple, cost-efficient, and diversified

Bogle advocated for an investment approach that mirrors the market's returns over the long term.

**After studying Vanguard’s actively managed funds they are closet indexers who make buy and sell decisions only on the margins attempting to add value to the overall portfolio.  Even with that their portfolio turnover is SIGNIFICANTLY lower as compared to their peers.  In other words the portfolio changes when their core positions (closet indexer) rise or decline significantly thus increasing or decreasing but never abandoning the stock.     

 Valuations

Have left Planet Earth!

Future 10 year Returns?

NEGATIVE!

When the equilibrium between ruling elites and the majority tips too far in favor of elites, political instability is all but inevitable. 

As income inequality surges and prosperity flows disproportionately into the hands of the elites, the common people suffer, and society-wide efforts to become an elite grow ever more frenzied. The wealth pump; it’s a world of the damned and the saved. And since the number of such positions remains relatively fixed, the overproduction of elites inevitably leads to frustrated elite aspirants, who harness popular resentment to turn against the established order. When this state has been reached, societies become locked in a death spiral it's very hard to exit.

In America, the wealth pump has been operating full blast for two generations. Our current cycle of elite overproduction and popular immiseration is far along the path to violent political rupture.

More than likely we'll embark upon a two decade long roller coaster bear market similar to 1966 to 1982 (17 years) marked by declining stock prices and high inflation.  This will also beat up bonds spouting ever higher interest rates and real estate whether residential or commercial prices will decline nominally and obviously under perform inflation.  This will significantly reduce the net worth of the top 50% (except the 1%) and many heavily leveraged players will be wiped out.  The bottom 50% will not feel too much pain as they have so little to lose (lack of stocks, bonds, RE) but will feel pain due to the overall inflation.

When??  It has already begun as bonds ended their massive bull market from 1981 to 2020 tearing into the flesh of long term bond buyers as measured by the 10 year Treasury bond that bottomed at 0.52% on August of 2020 (peaked 9-3-81 at 15.84%) currently today at 4.79%!  From absolute peak for price to interest 1 ÷ .52 = 192 (rounded) with todays price to interest 1 ÷ 4.79 = 21 So...(192 - 21) ÷ 192 x 100 = 89% DECLINE!

If the so called elites try to patch up this decline by attempting to force interest rates lower will only stoke the inflationary flames hotter with bond buyers demanding higher yields to protect their future buying power!

So...The elites whether they know it or not are on top of the mountain and no matter which way they will go it is the race to the bottom!  Politics will get even nastier along with pockets of civil unrest that is already happening as gangs of looters (inner cities) break into stores stealing and leaving before the police arrive!     

 U.S. Government

Organized Crime?

FDA lawyer admits: 'HPV' & all other 'virus'-related authorizations are based on ZERO scientific evidence

No evidence that the virus even exists. Life in prison.

Christine Massey FOIs Jan 10 Greetings and Best Wishes, On August 29, 2024 I filed an order (pg 1) with the US Food and Drug Administration (FDA) for all studies authored by anyone, anywhere in the possession/custody/control of the institution: 1. - that scientifically prove or provide evidence of the existence of any alleged "HPV" aka "Human Papillomavirus" (showing that the alleged particles exist and cause the illness/symptoms that they are alleged to cause) 2. - that describe the purification of particles that are alleged to be "HPV" directly from bodily fluid/tissue/excrement of so-called "hosts" (without adding any sources of genetic material or proteins) 3. - wherein the purported "genome" of any alleged "HPV" was found intact in the bodily fluid/tissue/excrement of a "host" (as opposed to fabricated in silico aka made-up / modelled on a computer) 4. - that scientifically demonstrate contagion of the illness / symptoms that are allegedly caused by purported "HPVs". Note that I made it easy on them by not requiring any evidence that the alleged particles hijack cells and replicate. And as usual, I asked that if any records match the above descriptions and are currently available to the public elsewhere, I be provided enough information about each one so that I may identify and access it (titles, authors, etc.). I also selected the “expedited processing” option based on “danger to human life”, given the fact that young people will continue being injected with dangerous ingredients based on the premise of a never-shown-to-exist “virus”. The next day I received an acknowledgement letter (pg 4) from Sarah B. Kotler (“J.D.”) who acts as Director, Division of Headquarters Freedom of Information, Office of Management and Enterprise Services, Office of the Commissioner, US FDA stating: “We will respond as soon as possible…” Three months later, I had not received a response and so on November 30, 2024 I followed up with Sarah (pg 6). This time Sarah responded (pg 8). She falsely claimed that I had acknowledged receipt of the FDA’s response. She also claimed not to know why I had made a reference to her “proper name”. I corrected Sarah that same day, pointing out that I had only acknowledged her unsigned acknowledgement letter and was still waiting for her official “no records” confession. I also pointed out issues with her “digital signatures” on responses to other imaginary-virus FOI responses, and let her know that the longer she stalls the worse it looks and the longer she might spend in jail for culpable homicide aka murder (pg 9). Sarah then claimed that a response had already been sent to me (pg 10), while ignoring the issues with her past “digital signatures” (emphasis added, below). “Pursuant to 45 CFR 5.28(a), “we will send you a response informing you of our release determination, including whether any responsive records were located, how much responsive material was located, whether the records are being released in full or withheld in full” … We have done that. Your request is closed. Are you saying you did not receive the response? If that is the case, I can send you another one.”  I informed Sarah that no FOI response had appeared in my inbox (pg 11). Sarah now indicated that she suddenly understood what the problem was (pg 12). Sarah immediately followed up with an email that looked like a response, but lacked an actual response (pgs 13/14). Her email did not inform me “whether any responsive records were located, how much responsive material was located, whether the records are being released in full or withheld in full” - despite indicating in her earlier email that such is required under 45 CFR 5.28(a). Instead, Sarah’s email contained irrelevant, false and misleading statements implying that viruses are known to exist and that the FDA actually protects people and ensures safety and efficacy of the products that it approves or authorizes. I pointed out the deficiency in Sarah’s non-response email, asked her to remove the irrelevant, false and misleading statements and gave her my affidavit re the virus-related FOI responses from 225 institutions in 40 different countries. Sarah then backtracked and contradicted her earlier claim of having already sent me a response and her theatrical performance of re-sending a response. She now asserted that “we consider your request misdirected” (pg 16). She also confessed, not for the first time, that: “It is not something that FDA would have records about. You may want to consider submitting to CDC.”  Anyone familiar with this FOI project knows that the CDC has already been FOI’d on HPV, SARS-COV-2 and dozens of other imaginary viruses and that they failed to provided a shred of valid scientific evidence every single time (because none exists). This had already been pointed out to Sarah (i.e. pg 12 here). And as Sarah knows full well, the FDA itself has failed every virus-challenge put to it (SARS-COV-2, avian influenza virus, monkeypox virus, any virus of the Poxviridae family). So I called Sarah out on her latest deflection, which amounts to a refusal to respond to the FOIA order. Sarah has made it clear for everyone to see: she knows perfectly well that no one at the FDA can provide or cite any valid scientific evidence showing the existence of any alleged virus or viral genome or "viral" anything or contagion. This makes it impossible for the “experts” at FDA to evaluate any test, quackcine or other intervention that supposedly relates to an alleged virus or viral illness. They are fakers, and their fraudulent rubber-stamping of products is just part of the murderous state-sponsored theatre. Everyone can draw their own conclusions as to how much prison time is appropriate for the lawyers, politicians, business people, pseudoscientists, etc. who are complicit in deadly “germ” hoaxes. Note: I have parted ways with the evil thieves at “Stripe” so if you would like to support my efforts, please see the Paypal button that is near the bottom of my homepage. (Note: this information has been sent to ~200 people who work for “the state”, lamestream media, etc. at Canada, Isle of Man, England and the U.S., so that they cannot claim later that they did not know. It will also be sent to people who act in the Canadian “justice” system… that has falsely prosecuted people in relation to “germs”.) Thank You Christine!