How to Win a Bar Fight with the Stock Market

There are a surprising number of websites that will teach you how to win a bar fight. This post translates that 'wisdom' into dealing with the your investments in the stock market with links to previous Chicken Little posts about the stock market. 

May 2018, Chicken Little Portfolio Performance

"It's not the money I will miss, it is the things" 

-- Private Judy Benjamin 

The 'Wealth Effect' is the money people spend when they become wealthier, often because of rising stock & housing prices. Will people continue to spend if assets do not rally in 2018? 

2018 may not have a positive wealth effect

April 2018, Chicken Little Portfolio Performance

The coming great financial storm may be upon us. In the past, I have focused on the probability and characteristics of the coming Financial Depression (e.g., "there will be a massive, historic drop in price for all risk assets"). In this post, I focus on the process of the decline, and the barrier you will face in saving yourself and your family. 

The Great Financial Storm Looms

Men Can be Evil: Economists are often confused

Men fill the world’s prisons, commit most murders, and have started all major wars. In another example of scientists rediscovering ancient truths, a new study of mine documents the costs men impose on (an experimental) society. In the study, status-seeking men are willing to impose enormous costs on others to move up in the hierarchy. 

Initial Bear Market Raid Complete

Chicken Little began a modest bear market raid by shorting US stocks in February. That short position is now closed. The Chicken Little Portfolio made 0.25% on this raid. (6.25% short positions and a ~4% decline in US stocks = 0.25%). While this is a tiny gain, making money on the first short position is great, and works to train the mind to look for more opportunities. The Dow Jones Industrials sits at 24,786 - roughly halfway between the January 26, 2018 high  and the lows of February. Chicken Little anticipates more declines.

Bear Market raid creates taste from more honey

March 2018, Chicken Little Portfolio Performance

The US stock market has declined 10% since January 26, 2018. Chicken Little predicts further declines. 

A Long Way Down

Break the Buy the Dip Habit

'Buying the dip' - investing new money after stock market declines - has been profitable for almost a decade. However, Chicken Little believes that buying the current dip will be disastrous (see, Chicken Little sees death). Keeping our money safe, however, requires overcoming our own brains.

Don't Buy this Dip 

February 2018, Chicken Little Portfolio Performance

Chicken Little has begun a first, baby bear market action. Because a variety of markets were weak in February, the odds that January 26, 2018 was the top have increased. Accordingly, Chicken Little has begun a first probing bear market action. (Follow up: this bear market raid ended in April 2018.)

Chicken Little makes a first bear market move

January 2018, Chicken Little Portfolio Performance

In January 2018, the Chicken Little Portfolio lost 1.66% while the Dow Jones Industrial Average gained an amazing 5.74%.

"This is the Top" - January 25, 2018 - Chicken Little 

Chicken Litttle is not bullish on US stocks

Chicken Little has been bullish on US stocks for a year and a half. As of January 25, 2018, Chicken Little is no longer bullish. 

Chicken Little is no longer bullish on US stocks.

Chicken Little exits Crypto currencies (again)

Chicken Little has exited cryptocurrencies after a second round of trading (see cyrpto post 2, crypto post 1). Winning at Vegas in a gambler's first visit is said to be a curse as it is hard not to return. For now, Chicken Little has no plans to re-enter for a third time. 

100% returns flood the brain with dopamine

A- for 2017 Chicken Little Portfolio performance (self-graded)

A-

I give the Chicken Little Portfolio a grade of A- for 2017. Wrong every day of the year on macro predictions, and still managed to beat out a decent return with disciplined, low-risk approach. Also, made a few bucks buying cryptocurrencies.