On October 8, 2018, I wrote "We sit less than 2% from an all-time high in the Dow, priced for perfection on the precipice of ruin." A modest ruin followed this prescient warning, and the Chicken Little portfolio was positioned correctly to make money from the decline.
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| Risk assets plummeted in late 2018 |
December 2018 performance
In December 2018, the Chicken Little Portfolio gained 3.27% while the Dow lost 8.35%. For the full year, the Chicken Little gained 1.27% while the Dow (including dividends) lost 3.63%
December 2018 was a 'flight to safety' month. All risky assets from stocks to junk bonds to crypto currencies had large declines. The only winners with US Treasury Bonds and gold.
2018 was a year where all risky assets went down. It was a challenging year not to lose money.
Chicken Little was perfectly positioned for the collapse in Q4 by being short US stocks, short non-US stocks, long Treasuries and long gold.
January 2019 portfolio positions
Chicken Little remains prepared for a deflationary depression by being long US Treasuries with a good amount of cash.
As we enter 2019, Chicken Little has temporarily moved to the equity sidelines by being long US stocks and short Non-US stocks. Stepping to the sidelines means that the portfolio is not positioned to make money on further declines in equity markets in early January 2019. Chicken Little still believes the sky is falling, but perhaps not in the very beginning of 2019.
Chicken Little remains prepared for a deflationary depression by being long US Treasuries with a good amount of cash.
As we enter 2019, Chicken Little has temporarily moved to the equity sidelines by being long US stocks and short Non-US stocks. Stepping to the sidelines means that the portfolio is not positioned to make money on further declines in equity markets in early January 2019. Chicken Little still believes the sky is falling, but perhaps not in the very beginning of 2019.
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