July 2026, Chicken Little Portfolio Performance

Stocks last to get the message?

Stock markets around the world are at, or close to, all-time highs. As stocks rise, government debt continues to rise, and real interest rate are at multi-decade highs. Can stocks withstand government malfeasance and higher interest rates? 

Debt up, interest rates up, stocks still standing 

The Chicken Little Scenario

The "sky is falling" Chicken Little view predicts a financial calamity because of misguided government fiscal and monetary policy. In particular, the three step scenario I have forecast is: i) recognition of government financial mismanagement, ii) rising real interest rates, and iii) declining asset prices including stocks.

Step One: Bad Fiscal and Monetary policy

Reuters reports, "The U.S. federal budget deficit for July jumped to $432 billion, a record for the month." The US deficit runs along at about $2 trillion a year, in what are generally good economic times. The cumulative debt marches higher month after month and year after year.

 

Step Two: Rising Real Interest rates

Because of the mounting debt, interest rates including real (adjusted for inflation) rates are rising rapidly around the world. Japanese rate are at the highest level in thirty years, US rates the highest in 19-years. And, furthermore, rates are likely to go higher. 

I predicted this years ago, and sold all my long-term bonds before they crashed. (2019 post: US Deficits can become huge., 2020 post: I sold all my long term bonds).

 

Step Three: Falling Stock Markets - Coming soon.

July 2026 Portfolio Performance

In July 2026, the Dow Jones Industrial Average lost 0.33%, while the Chicken Little Portfolio gained 0.06%.  Year to date, Chicken Little has returned 0.82% vs. a gain of 9.10% for the Dow. Stocks continue to climb and Chicken Little keeps losing money by trying to bet against stocks. 

	July 2026	YTD 2026
Chicken Little	0.06%	0.82%
Dow Jones Industrials	-0.33%	9.10%

July 2026 was a mixed month for stocks around the world. Emerging markets did the worst, losing over 5% in the month. Meanwhile, long-term bonds had a very bad month. Bonds, Gold, and bitcoin are all losers so far this year, while stocks are having a very good year.   

Asset	Symbol	July 2026	YTD 2026
Dow Jones Industrials	DIA	-0.33%	9.10%
Non-US Stocks	EFA	1.61%	11.65%
Emerging Market Stocks	EEM	-5.82%	18.37%
US Long-Term Bonds	TLT	-4.74%	-3.76%
Gold	GLD	0.86%	-6.25%
Bitcoin	BTC	4.15%	-29.68%

August 2026 portfolio position

Chicken Little Portfolio remains 100% in cash.  Looking for an opportunity to short stocks. 

Previous month's report      Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2026 (through July)	0.82%	9.10%
2025	-0.03%	14.56%
2024	3.30%	14.71%
2023	2.05%	15.80%
2022	-5.88%	-7.06%
2021	5.11%	20.69%
2020	8.04%	9.27%
2019	9.03%	24.82%
2018	1.27%	-3.63%
2017	4.57%	27.72%
2016	-1.92%	16.08%
2015 (April through Dec)	-2.49%	-0.27%
since inception (3/31/15)	25.40%	261.93%