1/4/21

December 2020, Chicken Little Portfolio Performance

Chicken Little continues to cower in fear of a global economic Depression. However, there has been one big change. Previously, Chicken Little was sure that the depression would be deflationary. Now, the chances of a Fed-induced inflationary Depression seem higher. 

Central Bank Printing has ruined Venezuela


December 2020 performance

The Dow Jones Industrial Average gained 3.23% in December 2020 capping an amazing rebound year. After losing 40% of their value in the beginning of Covid, stocks were pumped back to life by the Fed's easy money, ending the year with a 9.27% gain. The Chicken Little portfolio gained 0.66% in December to finish the year up 8.04% 

Dec 20202020
Chicken Little0.66%8.04%
Dow Jones Industrials3.23%9.27%

2020 turned out to be another free money year. Every asset rose in value. The riskier the better. Crypto lead the way with $3 dollars in profit, for every $1 dollar invested.  

Crypto has been the best investment 

The one year return to bitcoin exceeds 20 years of cumulative return in US stocks. The Dow ended the year very close to 30,000. Bitcoin quadrupled in 2020. To get a quadruple in the Dow (not including dividends), you would have had to have purchased in 1997, when the Dow was at 7,500. 

AssetSymbolDec 20202020
Dow Jones IndustrialsDIA3.23%9.27%
Non-US StocksEFA4.93%7.30%
Emerging Market StocksEEM7.01%17.68%
US Long-Term BondsTLT-1.22%17.91%
GoldGLD7.01%24.81%
BitcoinBTC58.72%296.70%


There were two ways for an investor to lose in 2021. First, take no risk and miss out on the cash. Second, sell during the COVID decline. 

These two ways to lose, highlight two attributes of post-2009 markets. First, financial risk-taking has been rewarded. Second, all dips have been buying opportunities. For over a decade, investors have been rewarding for taking risk, and for buying dips. 


Chicken Little continues to believe that the future will include periods where risk taking is punished and where buying the dips will be disastrous. 


January 2021 portfolio positions


As 2021 begins, Chicken Little is mainly hiding in cash. 74% of the portfolio is in cash, another 12.5% is in short-term treasuries. 

10% of the portfolio is in crypto and gold. This is designed as protection against the Fed's long-term campaign to destroy the US dollar, crush the economy, and foster social discontent. (Read End the Fed, and Establish a Crypto Beachhead). 


Monthly portfolio changes are small. However, over time, the positioning changes significantly. Three years ago, for example, Chicken Little had no fears of inflation, having huge exposure to long-term Treasuries. Now, with non-zero fear of inflation, Chicken Little has almost no exposure to long-term treasuries.

As noted, Chicken Little has 10% of the portfolio is gold and crypto.  If gold and crypto continue to rally, Chicken Little will increase their role in the portfolio. In principle, gold&crypto could become more than 100% of the portfolio (e.g., borrow dollars to buy gold & crypto).



  



Previous month's report                 Subsequent Month's report


Chicken LittleDow Jones Industrials
20208.04%9.27%
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)19.31%94.34%

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