September 2017, Chicken Little Portfolio Performance

In September 2017, the Chicken Little Portfolio lost 1.62% while the Dow Jones Industrial Average gained 2.14%.

Chicken Little is focused on one economic issue. Can the US economy, and stock market, handle a sustained rise in interest rates, albeit from historically low levels? At the end of last year, I predicted that the US Federal Reserve would keep tightening monetary policy until the stock market stopped climbing. I label this idea as The Yellen Collar

Will the economy be able to handle tighter money?

September 2017 performance

Chicken Little had a losing month in September because risk appetite returned to markets hurting the safety assets of long term US Treasuries, and gold. The Dow Jones Industrial Average continues to power ahead with year to date returns exceeding 15%. Bitcoin had a modest pullback in September in the context of an historic rally.  

Sept '17YTD 2017
Chicken Little-1.62%2.87%
Dow Jones Industrials2.14%15.13%

Chicken Little has been right about monetary policy, but wrong about its impact on markets. The Federal Reserve has raised interest rates in 2017, and started selling Treasury bonds (unwinding part of its policy of quantitative easing). To date, however, the stock market has handled the extra weight without any issues. In fact, stock markets around the world continue to produce powerful gains. 

AssetSymbolSept '17YTD 2017
Dow Jones IndustrialsDIA2.14%15.13%
Non-US StocksEFA3.10%20.46%
Emerging Market StocksEEM-0.04%28.54%
US Long-Term BondsTLT-2.48%6.24%

October 2017 portfolio positions

As of October 1, 2017, Chicken Little is long US Treasuries with a good amount of cash and a tiny amount of cryptocurrencies and stocks. During September, Chicken Little more than doubled the small investment in stocks. By modestly increasing the exposure to stocks, Chicken Little is trying to avoid the "crank" fate presaged earlier in the year

Previous month's report                           Subsequent Month's report

Chicken LittleDow Jones Industrials
2017 (through Sept 30)2.87%15.13%
2015 (3/31 -> 12/31)-2.49%-0.27%
since inception (3/31/15)-1.62%33.28%

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