10/18/20

September 2020, Chicken Little Portfolio Performance


There is one central economic question today. Can a country become rich by government deficit spending financed by the Central Bank 'printing' money. The current name for this idea is MMT - which stands for Modern Monetary Theory (click here for my review of MMT). 

The US Federal Government Spends, The Fed Prints. 



September 2020 performance

The Dow Jones Industrial Average slipped 2.16% in September 2020, while the Chicken Little portfolio lost 0.28%

Sept 2020YTD 2020
Chicken Little-0.28%5.68%
Dow Jones Industrials-2.16%-1.17%

In the most recent year, the US federal government spent almost twice what it raised in taxes and other revenues. $3.3 trillion in revenue and $6.4 trillion in spending. Who paid for the other $3.1 trillion? 

One answer is that the US Federal Reserve paid by e-printed new money to cover the spending. Who really paid for the deficit is a matter of debate. You, your grandchildren, or the fairy f**king grandmother (to quote Full Metal Jacket). 



As long as the US Government can print unlimited amounts of money, without obvious negative consequences, the stock market is likely to party on. Chicken Little fears the eventual collapse so is sidelined from owning stocks. This is the chicken choice, and it has been unpleasant to watch the stock market rally for six straight months. So be it. 

September 2020 saw modest negative returns for stocks around the world. Treasury bonds treaded water and crypto was the biggest winner. Year to date, the winners remain the 'safety' assets of Treasury bonds, gold, and bitcoin. Bitcoin has been outdistancing treasuries and gold recently, and year to date bitcoin's gains are now twice those of the other traditional safe havens. 

AssetSymbolSept 2020YTD 2020
Dow Jones IndustrialsDIA-2.16%-1.17%
Non-US StocksEFA-2.02%-7.10%
Emerging Market StocksEEM-1.00%-0.37%
US Long-Term BondsTLT0.66%21.49%
GoldGLD-4.17%23.95%
BitcoinBTC7.15%47.18%

October 2020 portfolio positions


 Chicken  Little continues to believe almost all assets are overvalued. Accordingly, the portfolio is almost entirely in cash, with a modest short position in stocks and modest long positions in gold, crypto, and treasury bonds. 

Chicken Little sees additional Central Bank printing coming. One outcome of that printing might be a continued rally in gold and bitcoin. Chicken Little is excited by crypto but contains that enthusiasm in a small position for now. 






Previous month's report                 Subsequent Month's report

Chicken LittleDow Jones Industrials
2020 (through Sept)5.68%-1.17%
20199.03%24.82%
20181.27%-3.63%
20174.57%27.72%
2016-1.92%16.08%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)16.69%75.77%

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