February 2020, Chicken Little Portfolio Performance

Since 2015, Chicken Little was hiding in Treasury bonds fearing a Japanese/German style collapse in bond yields (see 'turning Japanese' for one of many articles).  Now that this nightmare of low US interest rates is a reality, what is next? First, the mother of all monetary bubbles, and then second, the imposition of discipline from the financial markets.

The bull market is built on e-printing and spending

February 2020 performance

The Chicken Little Portfolio gained 2.09% in February 2020 while the Dow Jones Industrial Average lost -9.58%.  

Feb 2020YTD 2020
Chicken Little2.09%4.02%
Dow Jones Industrials-9.58%-10.38%

February was a negative month for stocks around the world. The big winner in February was long-term US Treasury bonds. For 2020 year to date, the safety trades of gold, crypto, and treasuries have performed well, while stocks around the world have lost about 10%.

AssetSymbolFeb 2020YTD 2020
Dow Jones IndustrialsDIA-9.58%-10.38%
Non-US StocksEFA-7.81%-10.37%
Emerging Market StocksEEM-3.78%-9.69%
US Long-Term BondsTLT6.62%14.82%

Governments around the globe are attempting to stave off economic disaster through creating money and government spending. These policies cannot work, and increase the ultimate pain in the day of reckoning. 

As evidence of the failure of these policies, consider that the US in 2019 restarted quantitative easing, ran a 5% deficit in peacetime, and grew only at 2%. So massive monetary and fiscal 'stimulus' has barely got the economy moving. 2020 looks worse. 

The economic patient needs help

How will it end? Badly, of course. Chicken Little believes the specific form of badly will be rising real interest rates which choke off the ability of the government to follow the failed policies of the last few decades. 

March 2020 portfolio positions

Chicken Little continues to live in fear of an economic depression. For many years that fear manifested as hiding in Treasury bonds. Now that Treasury bond prices have soared to record highs, Chicken Little is exiting the Treasuries. This process continued in February as Chicken Little builds the cash pile waiting for a full collapse in asset prices. 

Previous month's report                 Subsequent Month's report

Chicken LittleDow Jones Industrials
2020 (through February)4.02%-10.38%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)14.86%59.39%


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