August 2021, Chicken Little Portfolio Performance

"A chicken has to know his limitations." 
    - Clint Eastwood as Inspector Callahan.  

Chicken Little fears the Wolf

The Wolf in two charts

'The Wolf' for us chickens is the belief that US Government financial shenanigans must, inevitably, end in ruin. 

The US government is spending far more than it collects, leading to historic levels of US federal government debt. 

US federal government debt, measured correctly, is at or above the highest levels in history. Furthermore, even under rosy economic projections, debt is projected to increase dramatically. 

How does the US government pay for its over spending? By having the Federal Reserve e-print money. The Fed has printed $7 Trillion since 2009 and almost $5 Trillion in just the last 2 years. 

The Fed has printed $5 trillion! in 2 years

Can it really be true that the road to prosperity is to overspend and print money? In some circles this idea is called Modern Monetary Theory (MMT). (See my prior writing on MMT here.)

The Chicken Little MMT summary is that the charade has gone on longer than I imagined possible, yet I still believe MMT is magical thinking that ends in tears. 

August 2021 performance
The Dow Jones Industrial Average tacked on another 1.43% in August for a year-to-date gain of 16.89%. Chicken Little cowered his way to 0.17%  for a year-to-date return of 6.85%. 

August 2021YTD 2021
Chicken Little0.17%6.85%
Dow Jones Industrials1.43%16.89%

Most stocks around the world had an excellent month in August of 2021 with gains of around 1.5%. The 'safety' assets of US Treasuries and gold treaded water. Crypto had another good month and leads all major asset classes in returns over any recent time frame.

AssetSymbolAugust 2021YTD 2021
Dow Jones IndustrialsDIA1.43%16.89%
Non-US StocksEFA1.43%12.04%
Emerging Market StocksEEM1.56%1.90%
US Long-Term BondsTLT-0.22%-4.82%

September 2021 Portfolio Position
Chicken Little has gone a little crazy. Buying stocks and re-entering crypto. Chicken Little's stock exposure is the highest in years. Why? To reduce the mental pain on up days. That said, total exposure to stocks is just half of one percent of liquid assets. 

Chicken Little likes crypto as a defensive play against the Fed, but fears that the Fed has created so much froth that even defensive assets are overpriced. The crypto position will grow if Bitcoin can make a new all-time high. Similarly, Chicken Little will buy gold if it can make a new all-time high. 

Previous month's report                 Subsequent Month's report

Chicken LittleDow Jones Industrials
2021 (through August)6.85%16.89%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)27.48%127.17%

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