On Friday, May 8, 2015, I made a change to the Chicken Little Portfolio. In this note, I describe the specifics of this trade, the possible outcomes, and the motivation(s) for the trade. There are exactly 3 possible outcomes to the trade; when one occurs I will edit this post.
Who cares about Chicken Little?
Before reading on, you might ask yourself why you would care about a trade in the Chicken Little portfolio.
As I walked to the event, I felt the effect of being close to power. There are ten members of the Federal Reserve Open Market Committee, and I was hoping to ask a question of one of those ten powerful people. Think of what you would ask in this situation before reading more. My question was:
Losing 1.18% in a month is a more dismal than it may appear for two reasons. First, the portfolio is designed for safety. Second, most of the portfolio is in cash or medium term US Treasuries. April’s performance is like losing 50-0 without leaving the bench.
Today, I am connecting my macroeconomic views to my investment decisions. That means I will disclose my own investment decisions. The following chart represents my current investment position. This is my real financial position, not some target allocation or paper recommendation for other people.