July 2022, Chicken Little Portfolio Performance

The Fed is a hero again? By raising real rates to negative 6% and reducing the balance sheet by 1% has the Fed cured decades of bad decisions? A new bull market is born and new highs are coming soon? Anything is possible, but (unsurprisingly) Chicken Little sees new lows before new highs.

Chicken Little see financial storms ahead

July 2022 performance
The Dow Jones Industrial Average gained a massive 6.74% in July 2022 while the Chicken Little portfolio lost 1.34%. Year to date, Chicken Little has lost 1.87%, while the Dow has lost 8.65%

July 2022YTD 2022
Chicken Little-1.34%-1.87%
Dow Jones Industrials6.74%-8.65%

July 2022 was a rip roaring month for most risky assets. Stocks, bonds, and crypto all rose on the hopes that the trouble has passed. 

AssetSymbolJuly 2022YTD 2022
Dow Jones IndustrialsDIA6.74%-8.65%
Non-US StocksEFA5.05%-14.57%
Emerging Market StocksEEM-0.35%-17.46%
US Long-Term BondsTLT2.43%-20.07%

August 2022 portfolio position
The Chicken Little Portfolio remains prepared for financial disaster. The portfolio was stopped out of the short stock position. The portfolio owns no stocks, almost no bonds. 

The stock market has been on bullish tear recently. Up every day, and reducing year-to-date losses to under 10%. Is the bear market over? I don't think so.

The Fed has raised interest rates to a little over 2%. The latest inflation numbers say that US consumer prices are 8.5% higher than a year ago. So the real interest rate is negative 6.5%. 

Chicken Little believes that we are in the early phase of a return to financial sanity. Sanity includes positive real interest rates and an understanding that the Fed cannot 'support' the economy. Printing money is bad for the world, and Chicken Little still believes the piper will be paid. 

August 12, 2022, Dow: 33,800


Chicken LittleDow Jones Industrials
2022 (through July)-1.87%-8.65%
2015 (April through Dec)-2.49%-0.27%
since inception (3/31/15)23.05%114.27%

No comments :

Post a Comment