MISSOULA, MONTANA – I am very careful with money. I only buy winter clothes in the summer, for example. I love “on sale” items in the supermarket. And when it comes to stocks, I’m very conservative…

I’ll only buy stocks when they are “extremely cheap,” which I define as a price one standard deviation below their mean valuation…

(More below.)

Our Stay in a Farm Outside Missoula

Greetings from Missoula, Montana…

When we started our road trip around America, readers of these Postcards started writing to us and inviting us to camp on their properties. We’ve shamelessly accepted every invitation we could.

Four months and 10,000 miles later, we’ve camped in horse pastures, driveways, backyards, barns, parking lots, fields, and RV parks… and met many really nice people…

Today, we’re staying on a farm outside Missoula with our hosts Randy and Jackie. Here’s Penny getting a ride on a miniature horse with Jackie earlier today…


Penny, Jackie, and the miniature horse

And here we are having lunch in our hosts’ meeting hall, which they’ve let us use to do our schoolwork…


Kate and the kids having lunch in the meeting hall

One Chart All Stock Market
Investors Should Watch

This is the chart all stock market investors should be aware of. It shows how expensive or cheap the S&P 500 has been over the past 120 years.


When the blue line is high, stocks are expensive. When the blue line is low, stocks are cheap.

There are many ways to measure how expensive or cheap the stock market is. The classic way is to compare the S&P 500’s index level with its earnings. (The only reason ever to buy a stock is to get a claim on the future profits of a business.)

Another way is to compare the index to its sales. Or its dividends. Or its book value. This chart is a blend of four of these methods, giving a good general picture of the S&P 500’s valuation. It’s not important to understand the methodology here, only that it’s statistically rigorous.

Right now, the stock market is the most expensive it’s ever been in history, except for a short period in the late ’90s, when it was even more expensive.

Now notice the horizontal red lines in the chart above. The thick red line is the historic average (the mean). The dotted red lines represent one, two, and three standard deviations from the mean.

Right now, the stock market’s valuation is three standard deviations above its mean average. The stock market is very, very expensive, in other words.

The best time to buy stocks is when they are cheap. And the way to get a real bargain with stocks is to wait until stock market valuations reach one standard deviation below their mean average – as they did in 1918, 1933, 1942, 1949, and 1980.

When will stock market valuations next reach one standard deviation below their historic mean? I’ve no idea… but it surely won’t be for many years.

In the meantime, the stock market is going to offer very poor returns – probably even negative returns – to investors. We’ll do best to stay away from it altogether.

Personally, I’m keeping my money in gold, which my research shows tends to do very well at times like these when the stock market is very expensive.

– Tom Dyson

P.S. My minimum target for gold remains at $10,000 an ounce over the next five to 10 years. What’s the best way to play it? I explain in this video

Like what you’re reading? Send your thoughts to [email protected].


A Tom’s Portfolio reader asks about gold and tanker investments. And other readers ask about tankers… using an IRA to invest in precious metals… and Tom’s thoughts on bitcoin…

Reader comment: As a subscriber to Tom’s Portfolio, I’d love to hear your thoughts about gold in the shorter-term, as I’m hearing others warn that if a correction happens in the stock market, that it could take gold investments down with it. One recently cautioned that if someone isn’t comfortable seeing their gold investments drop 50% or more (which they thought was a possibility in the near-term), then they recommended reducing exposure to the sector now. What are your thoughts on this?

And also, the tanker stocks don’t seem to be performing too well at this point… One is down 25% currently. Do you feel this will turn around, or is it possible they will continue to decline if the broader stock market has a correction?

Tom’s response: Do you mind if I save this question for my Tom’s Portfolio official update, which I’m going to begin working on as soon as we end our road trip (in about a week, when we reach the Canadian border)?

Reader question: Just curious as you haven’t mentioned it in awhile… Are you still holding tankers? I’m guessing you are, and maybe buying more shares on the dip? Do you have a personal loss threshold or are you in for the long-term?

Tom’s response: I’m in tankers for the long-term. No loss threshold. I’m prepared to go down with the ship if that’s what it takes.

Reader comment: Many years ago, our family spent vacations driving like you in a RV. But we always spent one day a week at a motel. It was a needed break from the road. I am impressed your family can go so long in the road the way you are doing. Basically, you are camping albeit without the conveniences of the RV. Enjoy your travels! And I am following your gold experiment.

I bought Apple stock in my IRA in 1984 and held on to half of it during Apple’s bad years. It has now a value beyond my wildest dreams. But I realize it and most other stocks are in a bubble. Any suggestions when you have stocks in this bubble on what to do? Right now, it is outperforming the Fed printing machine. Most value has to stay in my IRA or I will have to pay very high taxes.

Tom’s response:I can’t give personalized advice, but I’d buy gold! It’s easy to buy gold ETFs in an IRA.

Reader comment: Greetings Tom and family, I have read some of your comments saying that you wouldn’t invest in bitcoin today, but as a longtime reader of your content, I am keenly aware of the six-figure score you made owning it many years ago. I am also aware that you missed out on serious “F-you” money by selling too soon. Porter Stansberry has recently come out as a big believer in bitcoin, and given the amount of money I have made following Porter’s advice over the last 12 years, I have to listen to him.

I am wondering if the life-changing windfall you missed clouds your ability to give an objective evaluation of bitcoin? Is it not possible that bitcoin could still be a 100-bagger from today’s levels and ultimately be a better exit from the U.S. dollar than gold? Wishing you and your family safe travels and happy adventures.

Tom’s response: I cannot buy bitcoin at $10,000 when I once bought it for $4. If bitcoin does eventually go to $1,000,000, it’ll go there without me on board. I know myself and I know I don’t have strong enough conviction in bitcoin to buy it and hold it through thick and thin. I have this conviction with gold, but with bitcoin, I’d be far too nervous about losing my money.

Meanwhile, other readers give their take on parental illness and the coming winter… and one suggests documentaries for the Dyson family…

Reader comment: Hi Tom – Thanks for sharing your family (and) wanderings with us. I recently lost my Dad and Mom, Dad to a peaceful old age with some heart congestion (90), and Mom 15 months later of a broken heart. Mom had Alzheimer’s but still knew us to the end.

Tom’s response: I’m sorry to hear this. My condolences. I hope you were able to spend some quality time with them before they died.

Reader comment: According to the Farmer’s Almanac forecast for the upcoming fall and winter months, I say you barely have the month of September before the cooler temperatures will rapidly come in. The Rockies are scheduled to get snow already. So be safe, pick out a spot, settle in until spring.

Reader comment: I am 82, so I’m allowed to say the following. My mother very recently died at 102. She was an amazing lady, but put me and my family under more stress than you can imagine. The old (me) have had our lives and it’s not right for us to ruin the lives of the young.

For your family’s sake, I would rethink the “living with Mum” bit. By all means, go to London and live close by if you like. But I can assure you that if you move in permanently with Mum, your family will suffer. We boys are attached to our Mums and no matter how wonderful Kate is, the situation will be very tough on her. I do subscribe to your newsletter.

Reader comment: There is almost a miracle worker in Croatia, a neurosurgeon, in Zagreb, who performs deep brain stimulation, after which people can walk, talk, and write, although almost paralyzed before that. He performs operations on patients with Parkinson’s Disease successfully. Some are made only with local anesthetics. The American embassy in Croatia can assist you. The name of the neurosurgeon is Darko Chudy.

Reader comment: Congratulations! Both of you are fortunate, since life doesn’t offer many second chances. Go forward knitted together in love and with a loving family. Be bold and always remember, God will provide all your needs. God bless you and your entire family.

Reader comment: I have greatly enjoyed all your letters. No long-winded dissertations here. Cold at night? Get yourself a buffalo hide. Prices have been steadily rising on them over the years. And there is a reason my ancestors used them. Sleeping under tanks? It better be cold out or you will sweat. Sleep on it in the winter and it will keep you ice cold. You’re welcome.

Reader comment: Hi Tom! Thank you for the great insights you share with us about your investing strategy and your personal life! It’s both inspiring and educational. Not sure of how much you’ve looked into this, but I thought I’d share with you that you may want to check out earthing.com and watch The Earthing Movie. While you’re at it – and if you haven’t already – I highly recommend watching Generation Zapped and Take Back Your Power. These documentaries are well made, and will give you and your family additional tools for living healthier and happier lives. Hoping this helps! Thanks for all you do!

Tom’s note: Thank you for writing in! We read every message you send us, even if we don’t reply right away. Please keep them coming to [email protected].