4/3/18

March 2018, Chicken Little Portfolio Performance

The US stock market has declined 10% since January 26, 2018. Chicken Little predicts further declines. 


A Long Way Down


March 2018 performance

In March 2018, the Chicken Little Portfolio gained 1.74%  while the Dow Jones Industrial Average lost 3.33%. 


Mar 2018YTD 2018
Chicken Little1.74%-1.34%
Dow Jones Industrials-3.33%-1.91%

In 2017, asset markets gave free money to everyone. In 2018, it has been much harder to make money. Most investments are close to zero in total return. The exception is bitcoin which has dropped 65% from its peak price of $20,000, and 44% year to date.  


AssetSymbolMar 2018YTD 2018
Dow Jones IndustrialsDIA-3.33%-1.91%
Non-US StocksEFA-0.84%-0.90%
Emerging Market StocksEEM0.54%2.46%
US Long-Term BondsTLT2.62%-3.52%
GoldGLD0.63%1.73%
BitcoinBTC-32.41%-44.68%





Could January 26, 2018 have been *the* top in the stock market? YesLast November, I predicted, "a massive, historic drop in price for all risk assets - stocks, real estate, and (almost) all bonds. Most people will be financially ruined by this bear market." (click for November article.

April 2018 portfolio positions

Chicken Little is long US Treasuries with a good amount of cash. Chicken Little has a modest short position in US stocks. The only change in the portfolio in the month was the addition of a modest short position in gold. Remember, Chicken Little predicts a *deflationary* crash -- one where gold goes down in price along with stocks.





Previous month's report                           Subsequent Month's report





Chicken LittleDow Jones Industrials
2018 (through March)-1.34%-1.91%
20174.57%27.72%
2016-1.92%16.08%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)-1.33%45.03%

2 comments :

  1. I've been enjoying your blog and agree with you that Jan 26th looks like the top of long bull market. The late February bounce looked like a great place to reduce risk and get short the market. My expectation and game plan was to see a dramatic penetration of the early February lows and then an oversold bounce into a good earnings season.

    Instead of a vicious (Elliott) wave 3 plunge in the market we have seen what could be deemed a successful test of the February lows. While I don't believe that we have put in a bottom and will soon make new highs, I do think that we could see a nice bounce, maybe back to the February highs. There seems to be elevated bearish sentiment (see AAII http://www.aaii.com/sentimentsurvey) and earnings probably will be good. Also, the indices are not making exclusively lower lows and lower highs. Furthermore, I'm not sure enough investors have read your March blog post warning against Buying the Dip. I think that is going to be hard to resist for many.

    New game plan is to ride out any bounce near the February highs which should be a good place to sell more longs or initiate more shorts. Any substantial breach of those highs will make me cautious and neutral, waiting to see if indeed the bull market can continue.

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    Replies
    1. Dear Reader,

      Your comments seem reasonable and you know a lot about markets. I have a longer time horizon, and have two big picture thoughts.

      #1) If January 26, 2018 was *the* top for many years, then not losing money in equities would be great. Making money by being short is a cherry on top. Shorting is a much tougher game than being short against one's benchmark.

      #2) If you have a bunch of cash, then you have already won. By that I mean bonds peaked in 2016 and stocks may have peaked. In the meantime, you can now buy a three year treasury with yield of almost 2.5%. 2.5% with very low risk is great. Europeans and Japanese are envious.

      Terry

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