Chicken Little makes bitcoin moves

Six months ago, I wrote, "I cannot believe the low price at a mere $11,700 per bitcoin." As I write this, bitcoin price is over $50,000, up over 50% so far in February (18 days) . Chicken Little has sold about 50% of the crypto position. I have also changed the composition of the crypto position toward "alt coins." 

The barrier to investing success is internal 

On earth day in 1971, Walt Kelly wrote that the enemy to a sustainable world is us, humanity. That sentiment was certainly ahead of its time (click for Greta Thunberg's 'how dare you' speech).  

"Skolstrejk för klimatet"

The idea of internal barriers generalizes. Consider individual goals in any area. Fitness, wealth, relationships, diet, and the Walt Kelly insight generalizes. The barrier to you 2.0 - the better, younger, richer, nicer, more effective you, is yourself. 

Chicken Little hates the Fed (click for The Fed is Corrupt and Incompetent), and believes that printing money will lead to economic devastation. However, success requires Chicken Little to conquer the baby chicken inside, not blame Jay Powell, Janet Yellen, Ben Bernanke, and Alan Greenspan for their mistakes (grave as those mistakes are). 

A lot of crypto for a chicken

Chicken Little's decision to sell half the bitcoin stake is psychological not economic or financial. The portfolio entered February with 14% of the portfolio in crypto (see monthly post). Crypto is incredibly volatile; prices can change by 20% in an hour. 

The Chicken Little Portfolio contains my real positions, run at arms' length by an investment management firm with performance verifiable. Because I fear the end of the financial world, the fund has been run with very low levels of risk. 

Since inception, the chicken little portfolio has returned just over 4% a year, with very low risk. Quantitatively, the portfolio beta has been slightly negative and the volatility has been 3%.

Chicken LittleDow Jones Industrials
Annual return (since 3/3/2015)4.03%12.37%
Beta (versus the Dow)less than zero1.00
Volatility (monthly returns)3%>15%

Chicken Little having 14% of the portfolio in crypto was a statement of conviction. It was also very risky for a chicken. 

What next? Chicken Little continues to look for safety. Paradoxically, in a world where central banks are committed to destroying fiat currencies and economies, crypto may be lower risk than cash. (Click for Currency Paradigm Shift).

Therefore, Chicken Little may make a more significant move toward crypto if the rate of currency destruction increases. 

February 18, 2021
Bitcoin:  $52,167
Dow Jones: 31,345
30-year treasury yield: 2.09%


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