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August, 2026: 31

Disclaimer - IMPORTANT - Read this first!

Investor's Journal is a diary focused strictly on investments and personal finance issues, primarily from a contrarian and retiree point of view. Follow along with an average guy's failures and successes as he learns, by trial and error, the fine art of value investing.

As of 8/28/26, the S&P 500 Index was as yet well above its 200-day moving average, so at this time we are proceeding on the assumption that the bullish trend of the past several weeks continues.

While the 200-day moving average suggests more bull market days ahead, the Buffett Indicator, derived by dividing the total market price of all U.S. stocks or stock funds by the gross domestic product, remains at an all-time high of roughly 237%. This probably forecasts negative returns for most investments being made at this time and further suggests either a large drawdown in equity prices in the not terribly distant future and/or an extended period (at least several years) of very low equity performance.

Even though my own current stance is one of dollar-cost-averaging buys of more equity shares, as there are funds to support periodic similar amount share purchases, a strategy that should result in more shares being bought when assets are down, less when they are up, i.e. lower average cost bases, a reasonable alternative approach would be to just keep extra funds at work in short-term bonds or bond funds for now, waiting for the substantial drop in equity prices that would seem to be inevitable in the next several weeks, months, or at most years. When the market has gotten ahead of itself in a major way like this before, drops in average equity prices of 50% or more have been common.

If, despite the above caveats, one wishes to continue an approach of dollar-cost-averaging into a portfolio of reasonably profitable ETFs, this selection and allocation has going for it historical returns averaging just under 11% annually, with losses of only slightly above 10% when there have been major market downturns: 20% each in 1. the bond-like etf with ticker symbol NEAR; 2. VOO; 3. VXUS; 4. SCHD; and 5. VBR. That level of average total returns in the past assumes, first, that one reinvest dividends quarterly and opportunistically to increase the shares in etfs that have fallen below the 20% each target level and, second, that, in lieu of annual rebalancing, one rebalance whenever the portfolio as a whole has experienced a loss of 10% or more, for instance due to a correction or other downturn in major market indices.

If one wishes to hold a large proportion of one's liquid assets in lower risk assets such as MMFs or the bond-like ETF with ticker symbol NEAR, pending a big downturn in the markets, and hopefully take advantage of then relatively bargain prices on strong securities with a wide moat, these appear to be good candidates for such purchases once their share prices have fallen sharply: BRK/B; COST; GOOG; GOOGL; MA; MSFT; TPL; and V.

As always, information in these entries is for educational or guidance purposes only and is not meant as directions in how to invest. Readers are encouraged before buying any shares to do their own due diligence and/or rely on trusted financial advisors.

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