The Wolf is Still Coming
Chicken Little believes the wolf is merely delayed. 13 years ago, before 'the' financial crisis, US Federal debt was $10 trillion. Today, the US debt is $28 trillion. The Federal Reserve has monetized $7.5 trillion of this sum. So $18 trillion of cumulative deficits financed, in significant part, by printing money. 'The' real crisis lies ahead.
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| In the end, the Wolf ate the Sheep |
Is the Wolf coming soon?
Chicken Little has begun shorting stocks, betting that the wolf may arrive soon. The all-time high on the Dow Jones Industrial Average was hit on August 16, 2021 at a level of 35,625. If the wolf comes, the Dow may not hit this level again for decades.
September 2021 performance
The Dow Jones Industrial Average lost 4.17% in September for a year-to-date gain of 12.02%. Chicken Little cowered his way to 0.34% for a year-to-date return of 7.21%.
September 2021 was a bad month for most assets. US stocks, non-US stocks, gold and long-term treasury bonds all lost 3-4% in September. Bitcoin was flat in September, but continues to leads all major asset classes in returns over any recent time frame.
October 2021 Portfolio Position
Chicken Little has a short position in US stocks (See Chicken Little sells stocks). The 34% of the portfolio short looks like a huge position, and in some way it is massive. That said, the position will be covered if the Dow makes a new high. Because the Dow's high is only about 3% away for the short sale price, the total risk of the trade is about 1% of the portfolio (3% * 34%).
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