The Death of Chicken Little?
June 2025 Performance
The Dow Jones Industrial Average gained 4.47% in June 2025. The Chicken Little Portfolio lost 0.48%. Through the end of June, the Dow has gained 4.35% in 2025, while the Chicken Little Portfolio has gained 0.97%
June 2025 was a strong month for most asset classes around the world with gains of over 4% in the US, strong gains in emerging market stocks, and a solid month for long-term Treasury bonds. Year to date, gold remains the best performer, and all major asset classes tracked here are now positive year to date.
The Failure of Chicken Little
The Chicken Little Portfolio has underperformed equities around the world and thus has failed in its mission of producing higher returns.
But couldn't one argue that Chicken Little has high risk-adjusted returns? It is true that the beta of the Chicken Little Portfolio has been slightly negative and the portfolio volatility has been about 1/10th that of US Stocks. So could I claim victory in producing above bond market returns with no market risk?
No, the goal of the Chicken Little effort was higher returns, not some risk-adjusted measure.
Furthermore, the cause of failure seem obvious in the march forward of AI and technology more broadly. In retrospect, it seems obvious that technological advances are making us all richer and that is swamping the effects of Government debt, rising interest rates, and wars in Europe and beyond.
So the Chicken Little effort has been a painful, costly and public failure.
July 2025 portfolio position
No change in the Chicken Little portfolio position in June, but the short position in US stocks will be covered when the Dow makes a new all-time high. That will leave the portfolio still entirely defensive -- mainly in short term treasuries with a moderate position in long-term US Treasuries.
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