Just curious on your thoughts from this Boglehead thread where they discuss adjusting the stock/bond ratio based on valuation.
At first glance, it seems a reasonable approach.An even easier method is to just add the earnings yield to the bond yield and then divide each by that total. For example, using your numbers above:
Earnings yield: 4.71%
Bond yield: 2.94%
Stock allocation = 4.71%/7.65% = 61.57%
Bond allocation = 2.94%/7.65% = 38.43%
As for when it goes to 75:25 or 25:75, that would depend on how different the two numbers became, with 25 or 75 simply being the outside boundaries during a time when either stocks or bonds were clearly over/under valued in relation to the other. In the handy numbers I had available (1997 onward) they never got quite that far apart. See this chart.
Or if you wish to commit sacrilege, you could apply it to the PP stock/bond allocation.
Reference: https://www.bogleheads.org/forum/viewto ... 0&start=50