October 2017, Chicken Little Portfolio Performance

In October 2017, the Chicken Little Portfolio gained 0.27% while the Dow Jones Industrial Average soared 4.39%.

Chicken Little has cleared the figurative decks by selling all risk assets in the portfolio. These investments in cryptocurrencies and equities were small, but significant from a psychological perspective. Clearing the deck of risk assets prepares the portfolio for a harsher financial environment.

Lord Nelson was killed here, Chicken Little now lives here

October 2017 performance

Chicken Little had a modestly winning month in October 2017 to continue a modestly winning year. 

Oct '17YTD 2017
Chicken Little0.27%3.14%
Dow Jones Industrials4.39%20.19%

All risk assets were positive in the month led by bitcoin's stunning 39.74% gain (in the month). Global equities continue their relentless rise, with the Dow Jones industrial average YTD return of over 20% making it the worst performing stock market covered by Chicken Little.  

AssetSymbolOct '17YTD 2017
Dow Jones IndustrialsDIA4.39%20.19%
Non-US StocksEFA1.65%22.45%
Emerging Market StocksEEM3.27%32.74%
US Long-Term BondsTLT0.16%6.41%

November 2017 portfolio positions

As of November 1, 2017, Chicken Little is long US Treasuries with a good amount of cash. In October 2017, Chicken Little sold all his equities and cryptocurrencies. 

Chicken Little got lucky with bitcoin and other cryptocurrencies by doubling the investment in a few months. Chicken Little's position in cryptocurrencies violated his own rules of momentum and conviction. Bitcoin certainly has momentum, but Chicken Little does not have sufficient conviction. An investor who violates his own rules deserves to lose. 

Chicken Little is ready for a bear market in risk assets. This sounds brave until one realizes that clearing the deck is often accompanied by warfare, failure, and death. Indeed, the photo at the start of this post is of the deck of the HMS Victory, flagship to Lord Nelson in the Battle of Trafalgar. The HMS Victory survived the battle, but Lord Nelson was killed. 

The start of the bear market in stocks and other risky investments continues to lie beyond the horizon. 

Previous month's report                           Subsequent Month's report

Chicken LittleDow Jones Industrials
2017 (through Oct 31)3.14%20.19%
2015 (3/31 -> 12/31)-2.49%-0.27%
since inception (3/31/15)-1.35%39.14%

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