3/1/24

February 2024, Chicken Little Portfolio Performance

 Crypto to the moon?

Tech stocks go up every day. As great as the returns to stocks have been, however, bitcoin and other cryptos are the best performing assets over almost any time period. Year to date, 1-year, 5-year, 10-year. Is crypto a safety asset or a risk asset? 

Crypto challenges all-time highs

February 2024 performance
The Dow Jones Industrial Average rose 2.41% in January 2024. The Chicken Little Portfolio gained 0.70% from its short-term treasuries, and being long a bit of ethereum. 

Feb '24YTD
Chicken Little0.70%1.67%
Dow Jones Industrials2.41%3.69%

February 2024 was a crypto month - Bitcoin up 45% in the month and bringing the all-time high of $69,000 in sight. All other broad asset classes having unremarkable years so far. Stocks in the developed world up a bit, emerging market stocks flat, long-term treasuries giving back some of the gains from the end of 2023: yawn. Except for crypto, which has exploded. 

AssetSymbolFeb '24YTD
Dow Jones IndustrialsDIA2.41%3.69%
Non-US StocksEFA2.99%2.52%
Emerging Market StocksEEM4.17%-0.55%
US Long-Term BondsTLT-2.24%-4.44%
GoldGLD0.46%-0.97%
BitcoinBTC45.39%48.04%

Chicken Little and Crypto
Chicken Little is a fan of crypto. I have friends who are in the finance establishment, teaching at the Harvard Business School and MIT. They view crypto as worthless. What is the 'use case' for crypto they ask? 

One use for crypto is a store of value. If you live in Russia, Lebanon, China, Namibia, Nigeria, Venezuela, Zimbabwe, and probably the US, you should be very worried that the government will completely debase your currency. 

The crypto community makes this point with the meme, "All fiat currencies go to zero." 



If you are worried about your government debasing your paper money, you want to move at least some of your money to real assets: stocks, real estate, commodities, precious metals, and crypto. 

Perhaps the best feature of crypto for wealth preservation is the fact that it can be hidden. For example, early in the Russian-Ukranian war, many Ukranian civilians left Russian-controlled territory. These refugees were systematically robbed along the way. People who carried cash or gold lost everything. If, however, the money was stored in crypto, and if the person survived, they kept 100% of their money.

The same story applies to South Americans trying to get to US and facing predation by human coyotes. Survive the desert and the walk and have your assets available.  Most of the world has currencies that are at imminent risk of significant decline. 

Other countries, like the US and Europe, have seen a slow and steady debasement over decades. Gold is now just under $2,000/ounce, up from $35/ounce in 1971. Measured against gold, the dollar has lost 98% of its value in the last half-century. 


So crypto is a government-free, zero physical weight, no-need-to-put-in-a-safe asset. Everyone should own some, I believe. 

Chicken Little has been a modest investor in crypto for years. See: 


Why does Chicken Little, a crypto fan, only have 2% of the portfolio invested in crypto? The answer is that I believe that the Central Bank, global-speculative-mania (GSM) includes even safety assets. By e-printed tens of trillions, the prices of all assets has been inflated, even the safety assets. 

So while I believe in the long-term benefits of crypto, I have not been able to hold large crypto positions over time. 


March 2024 portfolio position
The Chicken Little portfolio remains positioned for collapse. One trade in February 2024 - increased the modest short position in equities. Crypto position has gotten larger because the price has gone up - no increase in the amount of ether that I own. 



Previous month's report          Subsequent Month's report
Chicken LittleDow Jones Industrials
2024 (through February)1.67%3.69%
20232.05%15.80%
2022-5.88%-7.06%
20215.11%20.69%
20208.04%9.27%
20199.03%24.82%
20181.27%-3.63%
20174.57%27.72%
2016-1.92%16.08%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)22.46%161.75%

2/18/24

January 2024, Chicken Little Portfolio Performance

AI boom or speculative mania?

The stock market goes up every day; Nvidia, Google, Meta, and the rest of the magnificent seven except struggling Tesla. Meanwhile, financial excesses pile up - historic levels of government deficit and debts. Are financial markets anticipating technological improvements or going up because of simple speculation? 

Technological boom or speculative mania? 

1/13/24

December 2023, Chicken Little Portfolio Performance

 Chicken Little a failure?

A senior Goldman, Sachs & Co. executive recently said, "I'd be retired if it weren't for Terry Burnham." He is right in that I have been resolutely bearish for more than a decade while risk assets have soared. The best approach would have been to buy crypto, the second best, buy any risky asset, and, pulling up the rear, Chicken Little's portfolio - my real portfolio.  

Chicken Little has been wrong for a decade

12/17/23

November 2023, Chicken Little Portfolio Performance


Time to quit being bearish?
All major asset classes have rallied like crazy since late October. Many individual stocks and some stock indices have hit all-time, history-of-the-world highs. Bears are starving and dying. Is it time for Chicken Little to turn bullish?

Risk Assets are Soaring, Bears are Starving 

11/24/23

October 2023, Chicken Little Portfolio Performance

Real US interest rates have risen from being below zero to about 2%. This is the start of a longer-term return to tighter financial conditions. In this regime, many common beliefs will change and risk assets will decrease in price. 

Regime change in the US interest rates

10/2/23

September 2023, Chicken Little Portfolio Performance


The debt crises is getting closer. Interest rates are rising rapidly. The cause is simple - overspending. To paraphrase Winston Churchill, "never in the history of the US have so many spent so much of other people's money for breads and circuses." Current deficits are, by far, the largest non-crises deficits in the history of the US. 


9/3/23

August 2023, Chicken Little Portfolio Performance

WOLF, wolf, wolf, wolf, wolf!
I have been crying wolf prematurely for a decade. 
Aesop ends the fable of the boy who cried wolf with these lines: 
Q: I cried out, "Wolf!" Why didn't you come? 
A: Nobody believes a liar even when he is telling the truth! 

Protect your sheep

8/2/23

July 2023, Chicken Little Portfolio Performance

I have been a Chicken Little for more than a decade fearing payback for overspending and printing money. Ralph Waldo Emerson wrote, "A foolish consistency is the hobgoblin of little minds." Judge for yourself whether my consistency is foolish or prescient by watching this CNBC video from 2013 (click here for video). 

Little or Big Mind?

7/2/23

June 2023, Chicken Little Portfolio Performance

Is it time for Chicken Little to give up the bearish view and buy stocks? It certainly feels like time to buy stocks if one watches the stock market rally every day.  


Time to get Bullish?

6/19/23

May 2023, Chicken Little Portfolio Performance


The party in the stock market continues. Interest rates have gone up significantly, but the stock market also continues to rally.  Does Chicken Little have tiny, poorly-functioning bird brain? 

Nominal interest rates are at multi-year highs


5/15/23

April 2023, Chicken Little Portfolio Performance


The Dow Jones Industrial Average is at almost exactly at the same level as a year ago, and also the same level as two years ago. The stock market resilience has Chicken Little thinking. Who is wrong? Me or the stock market? 

Dow at the same level for 2 years


4/3/23

March 2023, Chicken Little Portfolio Performance

Is there going to be a deflationary debt crisis in the US with high real interest rates? I believe so. The investments to own in a deflationary, and high real interest rate, environment are cash and short term t-bills. Crypto and gold can serve as insurance in situations where it becomes hard to obtain and use cash.

Crisis investments