Historic increase in interest rates
Bond investors have been destroyed in recent weeks. On February 7, 2022, I wrote "paying the piper,' higher interest rates are coming. in the 4+ weeks since that post, interest rates have soared. The bad news is that rates can go a *lot* higher.
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| First payments to the Piper (graph from WSJ) |
Loose money made investing seem easy.
The Fed has e-printed money out of control. Created in 1913, it took the Fed almost a century to print $1 Trillion. Then after the Fed created the housing crisis, it printed $3 Trillion more. Even with inflation raging, the Fed was printing more money up until just a few weeks ago. $5 Trillion more has been printed since 2019!
Stagflation is the likely outcome of the Fed's malfeasance.
Interest rates have risen significantly. However, adjusted for inflation, interest rates are still negative. Thus, it is possible for the rise in rates to accelerate from here.
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| All investments will be crushed by interest rates |
Stocks have held up relatively well under the rise in rates. Eventually, all assets will be crushed if rates continue rise.
March 2022 performance
The Dow Jones Industrial Average gained 2.43% in March 2022 while the Chicken Little portfolio lost 1.78%. Year to date, Chicken Little has lost 1%, while the Dow has lost over 4%.
March 2022 was a mixed month. Long term US treasuries lost over 5% while emerging market stocks lost 3% . Stocks, crypto and gold had modest gains. Year to day, gold is the only winner.
April 2022 portfolio position
The Chicken Little Portfolio is prepared for financial disaster. 93% of the portfolio is in cash or relatively short-term US Treasuries. March 18, 2022, I more than doubled the short stock position (see 'Bear Market Operations Escalate').
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