Chicken Little Portfolio Performance October 2016

In October 2016, the Chicken Little Portfolio lost 2.37% while the Dow Jones Industrial Average lost 0.78%.

October 2016 performance

Oct 20162016 YTDSince Inception (3/31/2016)
Chicken Little-2.37%2.97%0.40%
Dow Jones Industrials-0.78%6.14%5.85%

Chicken Little Lost 2.37% in October because of a decline in the price of long-term US Treasury bonds. Every asset class tracked by Chicken Little lost money in October in a partial reversal of the shooting fish in a barrel month of July 2016.

AssetSymbolOct 2016YTD 2016
Dow Jones IndustrialsDIA-0.78%6.14%
Non-US StocksEFA-2.22%0.47%
Emerging Market StocksEEM-0.83%16.20%
US Long-Term Treasury BondsTLT-4.37%10.75%

End of Central Bank Tailwind?

Fasten your seat belts. 

There is one important, albeit subtle, change in financial markets. Interest rates may have stopped going down. If so, we are entering a new era without a tailwind of loose monetary policy. 

Interest rates have been in persistent decline for more than 30 years. That may now have changed as US interest rates remain above the lows set in May of 2016, and the widow maker trade may pay off now in Japan.

November 2016 portfolio positions

As of November 1, 2016 the Chicken Little Portfolio remains ready for a global, deflationary depression.

Chicken Little believes that Central Banks have made their final reflationary push and failed. Now deflation can accelerate. 

Accordingly, Chicken Little has initiated a small short position in gold. Chicken Little turned temporarily bullish on gold nine months ago. Now Chicken Little believes that gold can decline to below a $1,000/ounce over the intermediate term (0-2 years). 

The reinstatement of a short gold position was the only change made to the Chicken Little portfolio in October 2016

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