In June 2016, the Chicken Little Portfolio gained 4.05% while the Dow Jones Industrial Average gained 1.00%.
June 2016 performance
| June 2016 | 2016 YTD | Since Inception (3/31/2015) | |
| Chicken Little | 4.05% | 6.21% | 3.57% |
| Dow Jones Industrials | 1.00% | 4.17% | 3.89% |
The big movers in May were the safe-havens of gold and long-term US Treasury bonds; this continues the trends from earlier in the year.
In fact, almost every asset class has gone up in price so far this year. The fact that the biggest winners are gold and Treasuries, leads me to believe that Central Bank printing of money is pumping up all asset prices. Click to read my recent PBS article on Central Bank money printing.
To be concrete, emerging market stocks have returned 7.57% this year. This could be because these economies are prospering, or it could be because of loose money policies of global central banks. Because all asset prices are going up, I interpret the emerging market equity performance as coming from printing money. If the world's economies were strong, we would expect interest rates to rise, and long-term US Treasury prices to fall.
The Chicken Little portfolio gained 4.05% in May. This was a great month; driven entirely by strong gains in Treasury bonds.
In fact, almost every asset class has gone up in price so far this year. The fact that the biggest winners are gold and Treasuries, leads me to believe that Central Bank printing of money is pumping up all asset prices. Click to read my recent PBS article on Central Bank money printing.
To be concrete, emerging market stocks have returned 7.57% this year. This could be because these economies are prospering, or it could be because of loose money policies of global central banks. Because all asset prices are going up, I interpret the emerging market equity performance as coming from printing money. If the world's economies were strong, we would expect interest rates to rise, and long-term US Treasury prices to fall.
The Chicken Little portfolio gained 4.05% in May. This was a great month; driven entirely by strong gains in Treasury bonds.
| Asset | Symbol | June 2016 | YTD 2016 |
| Dow Jones Industrials | DIA | 1.00% | 4.17% |
| Non-US Stocks | EFA | -2.39% | -2.95% |
| Emerging Market Stocks | EEM | 4.52% | 7.57% |
| US Long-Term Treasury Bonds | TLT | 6.92% | 16.26% |
| Gold | GLD | 9.03% | 24.70% |
July 2016 portfolio positions
As of July 1, 2016 the Chicken Little Portfolio remains ready for a global, deflationary depression. Chicken Little is heavily invested in US Treasuries, and fractionally short US and international stocks. There were no big changes in the Chicken Little portfolio during June 2016.
Future posts will explain two small changes in the portfolio. First, Chicken Little sold some 30-year Treasury bonds. Second, Chicken Little become slightly more negative on non-US stocks.
Future posts will explain two small changes in the portfolio. First, Chicken Little sold some 30-year Treasury bonds. Second, Chicken Little become slightly more negative on non-US stocks.
It seems that as interest rates on bonds rise the bonds would become valuable and, hence, more expensive. What am I misunderstanding ?
ReplyDeleteThank you for your comment. Higher interest rates are great for people about to buy a bond.
DeleteWould you prefer to buy a 10 year treasury yielding
7% -- about the post WWII average
or
1.4% -- current yield under Greenspan/Bernanke/Yellen financial repression.
high rates are great for new bond buyers.
However, one you have purchased your bond, the current price of the bond goes down if interest rates rise.