October 2021, Chicken Little Portfolio Performance


Just when you thought it could not get crazier, it did. Markets exploded up in October 2021. Nassim Taleb tells an anecdote about our failure to predict. When the Lebanese civil war broke out in 1975, some people went to Cypress for the weekend expecting just a few days of trouble. The war lasted over 20 years. 

The Roaring 20s

October 2021 performance
The Dow Jones Industrial Average soared 5.87% in October. Chicken Little's poorly-timed short stock position caused the portfolio to lose 1.25%  

Oct 2020YTD 2020
Chicken Little-1.25%5.87%
Dow Jones Industrials5.86%18.58%

October 2021 was a great month for risky assets. The Dow gained almost 6% in one month. To put this in perspective, seven entire years since 2000 had smaller gains in US stocks than 6%. So stocks had a year's gain in a month. Crypto continues to be the best performer of the month, year, and decade. 

AssetSymbolOct 2021YTD 2021
Dow Jones IndustrialsDIA5.86%18.58%
Non-US StocksEFA3.13%11.83%
Emerging Market StocksEEM1.07%-0.99%
US Long-Term BondsTLT2.44%-5.30%

Signs of a bubble?
What is your favorite sign of a bubble in financial assets? Rivian with a market cap over $100 Billion? Shiba Inu's one-year return of +87,847,874%? If my math is correct, $1200 invested in Shiba one a year ago, you would have made you a billionaire with a B! 

All of this craziness in asset markets is driven by historic e-printing of fiat currencies by central banks. For me, the best measure of central bank malfeasance is that interest rates, adjusted for inflation, are negative in many parts of the world.

Real Interest Rates are Negative

What are we to do in a world with negative bond yields and soaring risky assets? The "Pogue Colonel" in Full Metal Jacket says, "It is a hard ball world son, we have to keep our heads until this peace craze blows over." 

November 2021 Portfolio Position
Chicken Little was gored by the bull in October 2021. The stock market rallied to make new, all-time, history of the world, highs. The Chicken Little short stock position was exited, and the portfolio returned to its prior minuscule stock position. 

Crypto continues to hit new highs and Chicken Little has increased the modest position. 

Previous month's report                 Subsequent Month's report

Chicken LittleDow Jones Industrials
2021 (through Oct)5.87%18.58%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)26.30%130.45%

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