Chicken Little First Dates, Buying US stocks.

On August 11, 2016, Chicken Little broke up with Treasury bonds, and began looking for love elsewhere. Consistent with Chicken Little "Investment Rules," this post describes Chicken little's first date with buying US Stocks. 

Given that Chicken Little fears a deflationary depression, buying US stocks has been emotionally challenging. some details follow. 

Chicken Little has bought US stocks

Keynesian Dating 

John Maynard Keynes famously replied to criticism of his changing views by saying, "When the facts change, I change my mind, what do you do?" 

Keynes was a great investor

Chicken Little was 100% invested in stocks from 1981 through 1999. Owning stocks is much easier psychologically than being negative. Six months ago, I laid out the Chicken Little criteria for becoming bullish.  

What would it take for Chicken Little to become beefy? 

1. New high in the Dow Jones Industrial Average

2. Rising US Corporate profits

3. Real Corporate Profits, not fake 

4. Destruction of Financial Safe Havens 

5. Global Stock Market Rally

Chicken Little Dreams of becoming Bullish

Here is the updated checklist for bullishness from that post: 

 #1: Dow Jones Industrial Average above 18,351 Yes. Current value is 18,901. Nothing says bull market more than new all-time highs in the stock market. 

 #2: 2016 US corporate profits greater than 2015. Maybe. As reported so far in 2015, corporate profits are lower than last year. However, it is possible that the full-year totals will show improvement.  

 #3: Gold price below $1,258. Yes. Gold is currently trading at $1,215 an ounce. 

 #4: 30-year Treasury interest rate above 2.66% Yes. 30-year  Treasury intererest rate is now 3.0% 

 #5: Non-US stock markets higher than today (EEM > $32.19 , EFA > $57.25). Partially. The emerging markets are higher (EEM is $34.94), but the international markets are lower (EFA is $56.52). 
  

How is the relationship going so far? 

The relationship with owning US stock is in the early stages. I would summarize the status as nervous and ready to run for the exit. 

Chicken Little announced the purchase of US Stocks in July, "Chicken Little is now long stocks, for the first time in years." 

Owning even a tiny amount of US stocks is hard for Chicken Little because I fear the looming depression. That said, success in many areas requires getting out of one's comfort zone. 

Chicken Little is Uncomfortable