Crypto & Chicken Little: Three Lessons and the Reality of Investing

Chicken Little has closed all crypto positions. This post looks back at the last 12 months, identifying three lessons, summarizes the messy reality of investing, and looks forward to a return to crypto. (All positions and changes were made public in real time.) 

June 2021, Chicken Little Portfolio Performance

The Bull market continues without pause. Chicken Little remains in cash. Risk-takers make money, chickens make nothing. 

A Lot of Bull

Chicken Little is back into Crypto

Correction in Crypto or end of the Bull Market?

Chicken Little is back buying Crypto. Was the recent sell off the end of the bull market or a correction?  Chicken Little is betting it was a correction - the harshest in recent months, but small compared to some corrections in prior cycles. 

The conditions favoring crypto remain in place. Mainly the Fed doing its best to end civilization. To restate the obvious, why is the Fed goosing the housing market by buying mortgages when housing is at an all time high, and housing prices are rising at historic rates?   

The Fed pours gas on the housing fire

May 2021, Chicken Little Portfolio Performance

Chicken Little remains terrified. Financial markets show no overt signs of trouble. The economy is growing rapidly. The party continues without Chicken Little who shuns risk, makes no money, and frets about the end of civilization. 

Chicken Little worries about his offspring

Chicken Little has Chicken Hands

Chicken Little has the opposite of Diamond Hands. Investors with Diamond hands hold during declines. At the first sign of adversity, Chicken Little runs away. As of May 1, 2021, Chicken Little had taken on a lot of risk - almost 6% of the portfolio in stocks and crypto combined (see post). That risk has been reduced to zero. Run away today to live to be terrified another day. 

Chicken Little has run away from crypto

 

Chicken Little's lessons from the Crypto Crash of May 2021

Bitcoin dropped from $65,000 to $30,000 in recent weeks. What did I learn from this drop? 

A teachable moment

April 2021, Chicken Little Portfolio Performance

Chicken Little stays true to form. Asset markets continue to climb. Chicken Little continues to fear the sky falling in the form of higher interest rates ahead. 

Chicken Little sees nothing but clouds

Buying a little Crypto - still for Defense

Chicken Little is buying crypto today at Bitcoin $48,000 and Ethereum $2,200. Chicken Little's crypto position is mainly a defense against central bank printing - not a speculation to make US dollars. Modest purchases today after selling the position down by about 75% in recent months - see previous posts on selling - Feb 18 sell crypto, March - 'temporarily pulled back on crypto'.

March 2021, Chicken Little Portfolio Performance

The Bull Market rolls forward crushing naysayers. US stocks soared in March of 2021, continuing a winning streak that dates back to March 23, 2020, March 9, 2009, and all the way back to 1800. Stocks for short run and stocks for the long run has been the way to make cash in America. 

It's a Bull Market

February 2021, Chicken Little Portfolio Performance

Question: What do you call a scared chicken? Answer: A chicken. The risks in financial markets seem even larger as the great white shark of higher interest rates appears (see last month's prediction). 

All debt crises end with higher interest rates 

Chicken Little's Current thinking

	Price 2/20/21	Long-term	Medium term	Position	Next Investment move
Stocks (Dow)	31,500	Negative	Neutral	Small short - probing action	Short more if bear market begins, buy among the ashes if collapse happens
Bonds (30-year Treasury)	2.13%	Neutral	Negative	Underweight	Reduce underweight when 30-year hits 2.81%, consider liquidation if inflation exceeds 6%
Gold	$1,785	Positive	Negative	Underweight (0%)	Buy if gold makes a new all-time high above $2,000
Crypto (BTC)	$56,500	Positive	Positive	Overweight	Trimming overweight on a calendar basis, buy more on 50% decline

Chicken Little makes bitcoin moves

Six months ago, I wrote, "I cannot believe the low price at a mere $11,700 per bitcoin." As I write this, bitcoin price is over $50,000, up over 50% so far in February (18 days) . Chicken Little has sold about 50% of the crypto position. I have also changed the composition of the crypto position toward "alt coins." 

The barrier to investing success is internal