Chicken Little Chickens out of US stocks

On July 14, 2016, Chicken Little bought stocks following up on a May 2016 Chicken Little checklist for becoming bullish

As of March 28, 2017, Chicken Little's dalliance with US stocks is over. In spite of  'free money' in the US stock market, Chicken Little has sold all of his holdings. Why give up free money?  

Chicken Little sells US Stocks

Chicken Little is a momentum investor, which means he buys assets that are going up. There is no more obvious momentum investment than US stocks.

If US stocks are in the midst of a massive bull market, why sell? Chicken Little, for lack of better wording, chickened out. Momentum is one of two Chicken Little investing rules; the second is belief in the position. 

Someone who believes a financial depression is coming, cannot own stocks. To paraphrase Dirty Harry, a chicken has to understand his fears. 

Chicken Little knows his limitations

What is the future for Chicken Little? It is to be a crazy crank fearing economic collapse for the indefinite future. Hiroo Onoda is one of the last known Japanese soldiers to surrender. Japan officially ended WWII in 1945, but Onoda remained at war until 1974. 

Chicken Little expects years or decades of isolation. 

Dow 20,700 at time of post

1 comment :

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