Terry Burnham

February 2026, Chicken Little Portfolio Performance

2026-03-03T15:34:00.000-08:00

Winter is coming

In 2019, I observed that, like the grasshopper, the US was running a huge government deficit during the salad days of low interest rates, low military spending, and no recession. We spent when we should have saved. Today, interest rates have risen, military costs are increasing, and we have negative savings for the next recession.

Historic spending without a crisis

The US approach to government spending changed around 2000. For the first two centuries of the country's existence, the US Government borrowed to finance major wars and crises such as the Great Depression. Since 2000, we have run enormous structural deficits even without any crises. The result is unprecedented fragility, a grasshopper-like lack of preparedness for the next big problem.

From 1790-2000, debt declined after crises

As I noted in 2019 (before COVID), the US should have been saving to get ready for crisis. The 2019 financial situation was benign - very low interest rates so low cost to service existing debt, very low spending on the military (from an historical perspective), and no recession.

Let us focus just on military spending. During World War II, military spending was 40% of US GDP. In recent decades, US military spending has declined from 9% to around 3% of GDP -- less even than the 5% we currently demand of NATO countries.

The US military spending is low; the world is dangerous

China is the most economically-powerful adversary with a greater population, faster economic growth, and massive increases in military spending. Russia is economically weak, but aggressive and stocked with nuclear weapons. The world has many other dangers.

What is the implication of massive US debt and deficits in a world that requires more spending to pay interest, more demands for military spending, and the inevitability of economic recessions? The answer for me remains, higher real interest rates. With myriad demands for capital, the economic price of capital - the real interest rate - has to continue to increase.

February 2026 Portfolio Performance

In February, the Dow Jones Industrial Average returned 0.25%, while the Chicken Little Portfolio gained 0.26%. Year to date, Chicken Little has returned 0.43% vs. 2.06% for the Dow.

	Feb '26	YTD 2026
Chicken Little	0.26%	0.43%
Dow Jones Industrials	0.25%	2.06%

February 2026 was a solidly positive month for risk assets around the world. Non US stock markets outperformed the US. Gold had an amazing month returning 8.72% for a 22.06% gain in two month of 2026 following an historic 2025. Long-term Treasury bonds have had a strong start to 2026, with 2+% each month.

Bitcoin lost 19% in the month is is sitting with a 50% decline from all time highs. Cryptos other than Bitcoin has suffered much more severe declines. Ethereum has lost more than 60% of its value, and many other cryptos have lost over 90% from their highs.

Asset	Symbol	Feb '26	YTD
Dow Jones Industrials	DIA	0.25%	2.06%
Non-US Stocks	EFA	4.40%	9.74%
Emerging Market Stocks	EEM	5.89%	14.38%
US Long-Term Bonds	TLT	4.27%	4.24%
Gold	GLD	8.72%	22.06%
Bitcoin	BTC	-19.57%	-24.08%

March 2026 portfolio position

Chicken Little Portfolio remains 100% in cash. No trades in February 2026. Like Vladimir and Estragon, I am still waiting.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2026 (through February)	0.43%	2.06%
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)	24.91%	238.55%

January 2026, Chicken Little Portfolio Performance

2026-02-01T16:02:00.000-08:00

Bull Market in jeopardy?

Global stock markets remain the last asset class standing. US Treasury bonds have lost half their value. Bitcoin has suffered a 40% decline, the US housing market is weak, and silver lost 40% in 2 trading days. Can stock markets around the world continue to rally?

Swimming in Debt

The core problem is that countries around the world are drowning in debt. The US debt to GDP ratio, for example, has increased from 33% in 2000 to 119.7% now - the highest level in history. This government spending spree has occurred during a positive economic environment with no large-scale war, low interest rates, and no severe recession.

I have been worried about government debts for many years. For example, see my post - US deficits can become huge from 2019. Recently, the world has caught up with me in worrying about overspending and e-printing money. Gold hit $5,500 an ounce last week as one expression of these fears.

Chicken Little remains scared that the sky will fall, and soon.

January 2026 Portfolio Performance

In January, the Dow Jones Industrial Average rose 1.80%, while the Chicken Little Portfolio gain 0.17%.

	Jan '26	YTD
Chicken Little	0.17%	0.17%
Dow Jones Industrials	1.80%	1.80%

January 2026 was an exciting month that appears boring when looking at the final tallies. Silver lost close to 40% in one day, yet still ended up gaining for the full month. Similarly, Gold had a positive month, but dropped over 10% in 24 hours last week.

In January, non-US stock markets continued to outperform the US with the emerging markets gaining over 8% in January. To put this in context, the Emerging Market EFT, EEM, has risen a total of 20% since 2007. So 8% in a month is in a massive increase for a set of markets that have been dead money for more than a decade.

Asset	Symbol	Jan '26	YTD
Dow Jones Industrials	DIA	1.80%	1.80%
Non-US Stocks	EFA	5.11%	5.11%
Emerging Market Stocks	EEM	8.02%	8.02%
US Long-Term Bonds	TLT	-0.03%	-0.03%
Gold	GLD	12.27%	12.27%
Bitcoin	BTC	-5.60%	-5.60%

February 2026 portfolio position

Chicken Little Portfolio remains 100% in cash. No trades in January 2026. Waiting for collapse.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2026 (through January)	0.17%	1.80%
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)	24.59%	237.69%

December 2025, Chicken Little Portfolio Performance

2026-01-13T18:28:00.000-08:00

Bull Market remains strong

In 2025, the bull market in global equities remained powerful, while Chicken Little occasionally left his hiding spot to try to short stocks. Every short effort ending in losses, and 2025 continued the losing approach of Chicken Little. Global interest rates, however, continued to rise, giving me some reason to fear that the sky might still fall.

2025: Bull Market beats up Chicken Little

December 2025 Portfolio Performance

In December, the Dow Jones Industrial Average rose 0.92%, while the Chicken Little Portfolio lost 0.43%. For the full year of 2025, the Dow has gained 14.56%, while the Chicken Little Portfolio lost 0.03%.

	Dec 2025	2025
Chicken Little	-0.43%	-0.03%
Dow Jones Industrials	0.92%	14.56%

December 2025 was a mixed month for asset classes around the world. Gold continued to rally by adding 2% in the month for a massive 63.68% for the year. Bitcoin slipped in December ending the year with a modest (for crypto) loss of 6.28%. Stocks around the world ended a very strong year with modest gains in December. Long-term Treasury bonds lost almost 3% in December to bring annual returns to under 4%.

Asset	Symbol	Dec 2025	2025
Dow Jones Industrials	DIA	0.92%	14.56%
Non-US Stocks	EFA	2.66%	31.30%
Emerging Market Stocks	EEM	2.11%	33.73%
US Long-Term Bonds	TLT	-2.92%	3.83%
Gold	GLD	2.18%	63.68%
Bitcoin	BTC	-2.93%	-6.28%

Could the sky still fall?

After ten years of failure, I continue to consider ending this blog almost every day. Why not quit? My answer, for now, I continue to write because my view of the world continues to unfold except for a fall in stock prices. Most importantly, global interest rates continue to rise.

The Chicken Little Thesis (a recap)

1. Governments are pursuing destructive policies of overspending and overly loose monetary policy.

2. Because of government corruption and incompetence, real interest rates will rise.

3. Higher real interest rates will cause asset prices to decline.

I believe that steps 1 and 2 of the Chicken Little thesis have been validated. In particular, the increases in global interest rates have been historic.

US interest rates near 20 year high

German interest rates near 20 year high

Japanese interest rates near 30 year high

Interest rates continue to rise globally. Additionally, I continue to believe that real interest rates will go even higher, and (eventually) stock prices and prices of other assets will fall.

In short, Chicken Little remains scared.

January 2026 portfolio position

Chicken Little Portfolio remains 100% in cash. No change since the start of December 2025.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
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)	24.38%	231.73%

November 2025, Chicken Little Portfolio Performance

2025-12-14T20:48:00.000-08:00

Equities: the last market standing.

Global stock markets are among the last major asset classes to prosper. Bond markets globally have been destroyed, Oil is under $60/barrel even with a weak dollar, Bitcoin has lost 30% of its value, and US residential real estate has declined in price over the last year.

Stocks strong amid other market declines

November 2025 Portfolio Performance

In November, the Dow Jones Industrial Average rose 0.43%, while the Chicken Little Portfolio gained 0.31%. Through the end of November, the Dow has gained 13.52% in 2025, while the Chicken Little Portfolio has gained 0.40%.

	Nov 2025	YTD 2025
Chicken Little	0.31%	0.40%
Dow Jones Industrials	0.43%	13.52%

November 2025 was a flat month for most asset classes around the world. Gold continued its meteoric rise adding over 5% in the month, while bitcoin sank 15%. Year to date, gold remains the winner, Stock markets around the world have been strong, while bitcoin has slipping into negative territory.

Asset	Symbol	Nov 2025	YTD 2025
Dow Jones Industrials	DIA	0.43%	13.52%
Non-US Stocks	EFA	0.73%	27.91%
Emerging Market Stocks	EEM	-1.76%	30.97%
US Long-Term Bonds	TLT	0.26%	6.96%
Gold	GLD	5.37%	60.19%
Bitcoin	BTC	-15.60%	-3.44%

The Last Market Standing

Loose money and government overspending will cause real interest rates to rise and, consequently, asset prices to decline. My central view has been, and continues to be, that government monetary malfeasance will lead to financial devastation.

	high price	date high price	current price	% from high
Long-term Treasuries (TLT)	$171.29	Apr 2020	$87.34	-49.01%
Bitcoin	$126,198	Oct 2020	$89,365	-29.19%
Oil (WTI, barrel)	$147.27	Jul 2008	57.73	-60.80%
Dow Jones Ind. avg.	48,887	Dec 2025	48,458	-0.88%

While stocks continue to rally other markets have declined significantly. Stock markets around the world continue to hit new all-time highs; The Dow hit an all-time high just two days ago. The other markets hitting new highs are gold and silver. Gold rallying is consistent with investing fearing financial collapse.

So, in a sense, all markets other than stocks are sending warning signals. Will stocks continue to stand alone? I am skeptical. Furthermore, I continue to believe that real interest rates can go significantly higher, putting even more pressure on stock prices.

Hence, Chicken Little remains a scared chicken.

December 2025 portfolio position

Chicken Little Portfolio remains 100% in cash. No trades in November 2025.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through end of Nov)	0.40%	13.52%
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)	24.92%	228.71%

October 2025, Chicken Little Portfolio Performance

2025-11-12T20:00:00.000-08:00

AI to pay off the debt?

Can AI, and technology more broadly, make us so rich that we can pay off our massive debts without collapse? US debts and deficits are at record levels. However, if productivity accelerates, we can grow out way out of the problem. There are many anecdotal signs of efficiency gains from AI, but no sign of a productivity boom yet in statistics.

Robots to the Fiscal Rescue?

October 2025 Portfolio Performance

In October, the bull market pushed the Dow Jones Industrial Average up another 2.58%. The Chicken Little Portfolio gained 0.36%. Through the end of October, the Dow has gained 13.03% in 2025, while the Chicken Little Portfolio has gained 0.08%.

	Oct 2025	YTD 2025
Chicken Little	0.36%	0.08%
Dow Jones Industrials	2.58%	13.03%

October 2025 was an strong month for most asset classes around the world. Bitcoin lost 5%, while all other asset classes rose solidly in the month. Year to date, gold remains the winner with a 52.03% surge so far this year.

Asset	Symbol	Oct 2025	YTD 2025
Dow Jones Industrials	DIA	2.58%	13.03%
Non-US Stocks	EFA	1.18%	26.98%
Emerging Market Stocks	EEM	3.53%	33.31%
US Long-Term Bonds	TLT	1.34%	6.68%
Gold	GLD	3.56%	52.03%
Bitcoin	BTC	-5.22%	14.40%

October 2025 portfolio position

Chicken Little Portfolio remains 100% in cash. No trades in October 2025.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through Oct)	0.08%	13.03%
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)	24.52%	227.29%

September 2025, Chicken Little Portfolio Performance

2025-10-13T07:53:00.000-07:00

Chicken Little Stasis

I am going to continue this blog until the end of the year and then re-evaluate. September 2025 was a month like almost every other one over the past 10 years. Stocks and other risky assets went up in price while scared Chicken Little misses the party.

Chicken Little continues to miss the party

September 2025 Portfolio Performance

In September, the relentless bull market pushed the Dow Jones Industrial Average up 1.95%. The Chicken Little Portfolio lost 0.28%. Through the end of September, the Dow has gained 10.19% in 2025, while the Chicken Little Portfolio has lost 0.28%.

	Sept 2025	YTD 2025
Chicken Little	-0.28%	-0.28%
Dow Jones Industrials	1.95%	10.19%

September 2025 was a great month for most asset classes around the world. All asset classes rose solidly to spectacularly in the month. Year to date, gold remains the winner with a massive 46.81%.

Asset	Symbol	Sept 2025	YTD 2025
Dow Jones Industrials	DIA	1.95%	10.19%
Non-US Stocks	EFA	2.03%	25.50%
Emerging Market Stocks	EEM	7.04%	28.77%
US Long-Term Bonds	TLT	3.49%	5.27%
Gold	GLD	11.76%	46.81%
Bitcoin	BTC	4.55%	20.69%

October 2025 portfolio position

Chicken Little Portfolio remains 100% in cash. No trades in September 2025.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through Sept)	-0.28%	10.19%
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)	24.07%	219.06%

August 2025, Chicken Little Portfolio Performance

2025-09-13T18:33:00.000-07:00

Chicken Little bloodied

The Bull Market continues onwards with daily record highs. Chicken Little has fought the bull for a decade, and lost almost every month. I am ready to capitulate emotionally, but so many of my macro predictions, other than a US stock market decline, have proven prescient, that I am not quite ready to quit.

Chicken Little beaten up

August 2025 Portfolio Performance

In August, the Dow Jones Industrial Average made its first new high of the year, and returned 3.38% in the month. The Chicken Little Portfolio lost 0.22%. Through the end of August, the Dow has gained 8.08% in 2025, while the Chicken Little Portfolio is flat.

	August 2025	YTD 2025
Chicken Little	-0.22%	0.00%
Dow Jones Industrials	3.38%	8.08%

August 2025 was a great month for most asset classes around the world. While bitcoin and long-term Treasury bonds lost money, all other asset classes had strong gains. Year to date, gold remains the biggest winner with a spectacular 31.36% gain.

Asset	Symbol	August 2025	YTD 2025
Dow Jones Industrials	DIA	3.38%	8.08%
Non-US Stocks	EFA	4.45%	23.00%
Emerging Market Stocks	EEM	2.65%	20.31%
US Long-Term Bonds	TLT	-1.46%	1.72%
Gold	GLD	4.99%	31.36%
Bitcoin	BTC	-5.39%	15.45%

Chicken Little vs. the Dow

Since inception the Chicken Little portfolio has returned 2.01% per year while the Dow Jones Industrial Average has averaged 10.93%. As a chicken, I have taken no risk, so the Chicken Little Portfolio has low returns with no risk (as measured by either beta or volatility). However, the goal of Chicken Little was higher returns, not higher risk-adjusted returns.

Chicken Little has failed to produce higher returns than the Dow since inception by a huge margin. The persistent underperformance leads me to want to give up.

Chicken Little has disappointed

Chicken Little's Victories

While my portfolio has had small returns, my view of the world has proven accurate. The view, as I written dozens of time in this blog, was/is:

1. US Government financial policies are terrible.

2. Because of policy mistakes, real interest rates will rise.

3. As real interest rates rise, asset prices, including stock prices, will fall.

Let us go through these predictions in sequence.

1a. US Government deficits are dangerous

In 2019, I wrote that US deficits could hit $6 Trillion or more. Furthermore, I highlighted the historical first of huge, peacetime deficits during economic growth: "What's amazing is that our (2019) $1 Trillion deficit comes with no large-scale war, very low debt service cost, and no recession."

Five years after my post on deficits, my view became very popular. On September 16, 2024, for example, the Wall Street Journal printed almost exactly what I had noted in 2019, "The U.S. isn’t fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were."

1b. The Fed is corrupt & incompetent

in 2017, I wrote that "The Fed is Corrupt & Incompetent." (See my post The Fed is Corrupt & Incompetent). In this 2017 post, I focused on the Fed's corruption ("Having or showing a willingness to act dishonestly in return for money or personal gain.") This followed my 2015 article "End the Fed," which focused incompetence.

During COVID, The Fed e-printed trillions of dollars and created a massive inflation. Further evidence of incompetence.

The Federal created inflation during COVID

Recently, two Fed governors have been implicated for corruption (no convictions yet). Consequently, the world now widely shares my views from 2015 and 2017.

People do not (and should not) trust the Fed

2. Real Interest Rates will Rise

In 2016 (see post), I predicted rising real interest rates. In April 2020, I wrote, "Now that Treasury bond prices have soared to record highs, Chicken Little has exited Long-term Treasuries." The long-term treasuries that I sold proceeded to lose more than half their value.

I have been 100% correct that interest rates would rise from 2020 lows. Here are two charts from the Wall Street Journal from last week.

Interest rates around the world haves indeed surged. However, real interest rates, rates adjusted for inflation, are still below long-term averages.

Real US interest rates are still low

Given the historic levels of debt, I continue to believe that real interest rates will go up significantly.

2. Asset Prices will decline

While US stock prices continue to go up, and have produced strong returns, many other assets have disappointed. Long-term US Treasuries have lost half their value from 2020 peaks. Here is a chart of long-term treasury prices showing there devastating decline.

Long-Term US Treasuries have lost 50%

Non-US stocks have also had low returns. Here are charts for 20-year returns for non-US developed stocks (EFA) and emerging market stocks (EEM).

Non-US stock indices almost no gain in 20 years

Emerging Market Stock Indices below 2007

Summary: Chicken Little still chicken

For over ten years, I have predicted that disastrous US Government financial policies would lead to asset market turmoil including the US stock market. In reality, there has been massive asset market turmoil, but US stocks have surged.

I would love to believe that the robots are going to make us all so rich that we will overcome our financial problems. I am long-term optimistic, but still believe we need a debt purge to set us up for good times.

Remember, technological innovation around the time of the Great Depression included jet engines, antibiotics, air conditioning, interstate highways, radar, and many more inventions. Technological progress does not guarantee rising stock markets.

Question: What do you call a scared chicken? Answer: A chicken.

I remain worried because the macro scenario I feared has occurred, while taking roughly a decade longer than I anticipated.

Chicken Little is still a chicken

September 2025 portfolio position

Chicken Little Portfolio is 100% in cash; preparing to end the Chicken Little column.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through August)	0.00%	8.08%
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)	24.42%	212.96%

July 2025, Chicken Little Portfolio Performance

2025-08-11T16:13:00.000-07:00

When will the Dow make a new high?

Last month I wrote, "The Dow Jones Industrials are poised to make a new all-time high. I am likely to end the Chicken Little effort after that new high." I stand by that statement, but so far the Dow stubbornly refused to take out the high from December of 2024. Here is my performance from inception through last month.

July 2025 Portfolio Performance

The Dow Jones Industrial Average gained 0.19% in July 2025. The Chicken Little Portfolio lost 0.74%. Through the end of July, the Dow has gained 4.55% in 2025, while the Chicken Little Portfolio has gained 0.22%

	July 2025	YTD 2025
Chicken Little	-0.74%	0.22%
Dow Jones Industrials	0.19%	4.55%

July 2025 was a neutral month for most asset classes around the world. Bitcoin gained 7.96% in the month. Year to date, gold remains the best performer, Bitcoin is rapidly catching up to gold, while US stocks and bonds have lagged. Non-US stocks are having a great year, in significant part because the US dollar has weakened.

Asset	Symbol	July 2025	YTD 2025
Dow Jones Industrials	DIA	0.19%	4.55%
Non-US Stocks	EFA	-2.06%	17.76%
Emerging Market Stocks	EEM	0.66%	17.20%
US Long-Term Bonds	TLT	0.37%	3.23%
Gold	GLD	-0.61%	25.12%
Bitcoin	BTC	7.96%	22.03%

The Dow's underperformance?

Divergence. The S&P 500 and the NASDAQ are vastly outperforming other indices. As note, the Dow Jones Industrial Average all-time high was in December of last year.

Does the divergence between the Dow, S&P 500 and NASDAQ mean something important? Perhaps.

The true divergence is between the Mag 7 stocks and all others. Market turns are often preceded by divergences similar to what we have seen. Many other indices including the Dow Jones Transportation Index have also failed. Every day that the divergence continues increases the changes that the market is at risk for a decline.

August 2025 portfolio position

No change in the Chicken Little portfolio position in July. The short position in US stocks will be covered when the Dow makes a new all-time high.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through July)	0.22%	4.55%
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)	24.69%	202.74%

June 2025, Chicken Little Portfolio Performance

2025-07-05T07:21:00.000-07:00

The Death of Chicken Little?

Chicken Little has underperformed stocks since I started this blog:

The Dow Jones Industrials are poised to make a new all-time high. I am likely to end the Chicken Little effort after that new high.

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	YTD 2025
Chicken Little	-0.48%	0.97%
Dow Jones Industrials	4.47%	4.35%

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.

Asset	Symbol	June 2025	YTD 2025
Dow Jones Industrials	DIA	4.47%	4.35%
Non-US Stocks	EFA	2.36%	20.23%
Emerging Market Stocks	EEM	6.97%	16.43%
US Long-Term Bonds	TLT	2.62%	2.86%
Gold	GLD	0.41%	25.90%
Bitcoin	BTC	1.70%	13.03%

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.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through June)	0.97%	4.35%
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)	25.62%	202.15%

May 2025, Chicken Little Portfolio Performance

2025-06-08T21:01:00.000-07:00

Chicken Little Still Bearish

Here are three important predictions I have made:

1. The US budget deficit is large and that is a problem.

2. Interest rates will rise.

3. Bitcoin at $11,700 was a huge buy.

A stock market decline is next and, subsequently, more social unrest.

Stocks next, then more social unrest

May 2025 Performance

The Dow Jones Industrial Average gained 4.12% in May 2025. The Chicken Little Portfolio lost 0.14%. Through the end of May, the Dow has lost 0.12% in 2025 while the Chicken Little Portfolio has gained 1.45%

	May 2025	YTD 2025
Chicken Little	-0.14%	1.45%
Dow Jones Industrials	4.12%	-0.12%

May 2025 was a strong month for stocks around the world with gains of over 4% in the US, the Non-US developed markets, and emerging markets. Bitcoin rallied back to all-time highs while US Treasuries slipped. Year to date, gold remains the best performer with a gain of over 25% in the first five months of 2025.

Asset	Symbol	May 2025	YTD 2025
Dow Jones Industrials	DIA	4.12%	-0.12%
Non-US Stocks	EFA	4.79%	17.46%
Emerging Market Stocks	EEM	4.02%	8.85%
US Long-Term Bonds	TLT	-2.81%	0.24%
Gold	GLD	-0.06%	25.39%
Bitcoin	BTC	9.74%	11.14%

June 2025 portfolio position

Chicken Little re-initiated a significant short position in stocks late in May 2025 (see post: short again). I will close the short position if the Dow makes a new all-time high (45,073). The trade has the potential to lose 6.6% if the Dow makes a new high. The possible benefit is some protection if the economy and the stock market weaken.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through May)	1.45%	-0.12%
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)	26.23%	189.22%

Re-initiated Short position in US Stocks

2025-05-21T11:35:00.000-07:00

Sold stocks; Interest rates up to cycle highs

April 2025, Chicken Little Portfolio Performance

2025-05-06T13:51:00.000-07:00

Fire in the Bond Market

Early on April 9, 2025 global bond prices were plummeting, and stock markets were set to crash. Hours later, President Trump paused tariffs; the bond market recovered and global stock markets soared. The Wall Street Journal reported that the bond market influenced President Trump, "I saw last night where people were getting a little queasy.”

The Bond market was 'yippy'

Bond prices are paramount

Interest rates are central to the economy. In short, bonds are more important than stocks. This was reinforced in April.

Immediately after the Liberation Day tariffs were announced, the US stock market lost $6 trillion in value. Asked if he wanted stock prices to decline, President Trump responded with, "I don't want anything to go down. But sometimes you have to take medicine to fix something.

Sanguine about stock market declines, President Trump announced the tariff pause within hours of the bond market rout.

Why are interest rates so important -- so important that they influenced President Trump? The answer is that higher interest rates cause the economy to slow down. Mortgages, car loans, corporate borrowing all become more expensive when bond prices decline.

Furthermore, all asset values decline with rising real (inflation-adjusted) interest rates. "Duration" is defined as the sensitivity of an investment to changes in interest rates. For every 1% rise in real interest rates, an asset's value drops by 1% times its duration.

The US stock market has a duration of approximately 25 years. So a 1% rise in real interest rates causes a 25% decline in stock market values. Thus, apparently small changes in real interest rates have enormous implications for the economy.

The bond market rout was set to cause a slowdown in the US economy, and a significant decline in the prices of houses, stocks, and other assets. Now that the tariffs are paused and stock markets around the world are much higher, can we relax?

No.

Real Interest Rates will rise

Interest rates are central to an economy, and rising real rates spell trouble. Regardless of who is President, and independent of any tariff policy, US real interest rates are going to rise. The consequence is going to be a pervasive change in the US economy, and society more generally.

The real interest rate is the "nominal' interest rate minus the inflation rate. For the United States, I use the 10-year US Treasury bond yield for the nominal interest rate and the Consumer Price Index (CPI) to measure inflation. (There are other ways to calculate real rates, and they all paint the same picture.)

The real rate today in the US is 1.56%. The average 10-year Treasury bond yield so far in 2025 is 3.95%, and the most recent CPI calculates prices having risen 2.39% over the last year.

Real interest rates are going to rise from the current 1.56%. Why? The current rate is historically low, still recovering from the Federal Reserve's disastrous decision to electronically print enormous sums of dollars.

Post WWII real interest rates

The following chart shows real US interest rates from 1953-2025. I divided the data into periods based on important macroeconomic events.

1953-2008: "Normal" times

Real interest rates averaged +2.66% between 1953 and 2008 (the beginning of the housing crisis). A real interest rate of somewhere around 3-5% is consistent with many long-term averages in a range of countries.

2008-2021: The Grand (failed) experiment

US (and global) governments sought to cushion the impact of the housing crisis. Consequently, the US government undertook historic approaches to both fiscal and monetary policy.

First, the US government ran historically large budget deficits. The post-2008 deficits were never before seen in peacetime. The large deficits led to US debt-to-GDP levels that are at or above the highest levels in history.

What happened to real interest rates during this experiment of novel, large peacetime US federal deficits? Without any other action, the expectation is that US government would have to pay high interest rates to sell the large quantity of Treasuries.

However, the US Federal Reserve undertook historically loose money that delayed the cost of the US government overspending. The Fed created 8 times as much new money since 2008 as it had in the prior century: The mother of all monetary bubbles (at least for the US).

Consider that the Federal Reserve was created in 1913. Between 1913 and 2008, the Fed electronically created just under $1 Trillion. Then, in an historically unprecedented move, the Fed created an additional $8 trillion in new money.

The Fed e-printed trillions

Federal Reserve printed money and kept short-term interest rates low. From 2009-2021 the average real interest rate was 0.09%.

What happens with 0% interest rates? A crazy world. Housing prices soared, stock prices rose to historic levels, and the ultra-loose money created the greatest inflation in a half century.

Overspending by the US government, and loose money by the Federal Reserve were both terrible decisions.

2022+: The Hangover

As a consequence of the Fed's loose monetary policy, inflation soared. The Fed began trying to undo its mistakes beginning in 2022 by raising some interest rates, and selling some of its bonds.

Where does it end?

I continue to believe that real interest rates will continue to rise, and will peak significantly above the 2.66% average between World War II, and the twin mistakes of overspending an overprinting. We are going to have to pay for the strange period of zero real interest rates and massive government overspending.

Thus, I continue to predict rising real interest rates, lower asset prices, and turmoil.

April 2025 Performance

The Dow Jones Industrial Average lost 3.17% in April 2025. The Chicken Little Portfolio gained 0.23%. Through the end of April, the Dow has lost 4.08% while the Chicken Little Portfolio has gained 1.59%

	Apr 2025	YTD 2025
Chicken Little	0.23%	1.59%
Dow Jones Industrials	-3.17%	-4.08%

April 2025 was a wild month for investors, but ended up almost unchanged for a variety of investments. US stocks and Treasury bonds lost money, while stocks outside the US had modest gains. Bitcoin and gold had good months. Year to date, gold remains the best performer with a gain of over 25% in the first four months of 2025.

Asset	Symbol	Apr 2025	YTD 2025
Dow Jones Industrials	DIA	-3.17%	-4.08%
Non-US Stocks	EFA	3.70%	12.09%
Emerging Market Stocks	EEM	0.14%	5.33%
US Long-Term Bonds	TLT	-1.71%	2.80%
Gold	GLD	5.42%	25.46%
Bitcoin	BTC	14.88%	1.28%

May 2025 portfolio position

Chicken Little covered the short position in stocks in April 2025. I still believe the end is coming soon for stocks, but investments do not go in a straight line. Stocks began to rally strongly in recently weeks after about a 20% decline (depending on what index one examines).

In addition, I have added to my long-term US Treasury bond position. This may seem odd given that my #1 prediction is rising real interest rates. Why buy bonds if one predicts rising rates? Two answers. First, oil is now at $58/barrel and, more generally, I am in the deflation camp. Rising real rates can be accomplished by deflation without rising nominal rates.

Second, I would like to own a lot of Treasury bonds, so I am underweight relative to where I would like to be given my age, and the fact that I live in California. Treasury bonds are not taxed at the state level, so the higher one's state tax rate, the better the income from US Treasuries.

Long-term treasury bonds are obviously riskier that shorter-term bonds. However, with a 5% yield on a tax-advantaged investment, bonds do not seem ridiculously over-priced.

When long-term Treasuries yielded 1%, I sold the last of my holdings. See my blog posts selling bonds:

August 2016 - Looking forward to selling long-term Treasuries.

June 2019 - First sale of long-term treasuries.

March 2020 - sold the last of the last of the long-term treasuries.

The TLT is an ETF for Long-term US Treasury bonds. The TLT maximum price was $179.70 in March 2020. The price today is $87.13 - more than a 50% decline. I sold part of my long-bond position in 2019 in the $140s. Then I sold the last of the long-term Treasuries in March of 2020 in the high $160s. I have re-purchased part of my long-bond Treasuries at prices below $90.

Sold bonds higher, bought back some recently

Obviously, the TLT can go much lower than the current price of $87.13. The fact that bonds have been destroyed, doesn't mean they won't be destroyed even more. In short, even at 50% off from highs, long-term US Treasuries are still risky.

However, having dodged a 50% decline in the price of long-term US Treasuries, I am okay holding some bonds at 5% yield, while acknowledging the risks.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through April)	1.59%	-4.08%
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)	26.40%	177.77%

March 2025, Chicken Little Portfolio Performance

2025-04-02T18:56:00.000-07:00

WOLF

"No one believes a liar even when they are telling the truth." -- My favorite line from the boy who cried wolf. The failed US government policies of spending too much and "printing" money must result in financial ruin. I remain 100% bearish.

March 2025 performance

The Dow Jones Industrial Average lost 4.03% in March 2025. The Chicken Little Portfolio gained 1.56%. Through the end of March, the Dow has lost 0.94% while the Chicken Little Portfolio has gained 1.36%

	Mar 2025	YTD 2025
Chicken Little	1.56%	1.36%
Dow Jones Industrials	-4.03%	-0.94%

March 2025 was a mixed month for investors. US stocks and Treasury bonds lost money, while stocks outside the US had modest gains. Bitcoin gave back a bit more, while gold gained almost 10% in the month. Year to date, gold is now by far the highest performer. Over any longer term period up to ten years, bitcoin has been the best investment.

Asset	Symbol	Mar 2025	YTD 2025
Dow Jones Industrials	DIA	-4.03%	-0.94%
Non-US Stocks	EFA	0.18%	8.09%
Emerging Market Stocks	EEM	1.81%	5.19%
US Long-Term Bonds	TLT	-1.51%	4.59%
Gold	GLD	9.45%	19.00%
Bitcoin	BTC	-3.34%	-11.84%

Why sell the gold position?

Other than the physical gold that I hold, I sold my precious metals (gold and silver) last week. Why sell the best investment, and keep the worst investment (long-term treasuries)? Keeping winners and selling losers is my general strategy (and the best approach historically).

I sold my gold for two reasons. First, I continue to believe that the one overriding feature of the coming era will be higher real (inflation adjusted) interest rates. In a high/higher real interest rate environment, gold can do fine, but there will be many ways to make money with cash. Second, the move up in gold has been so extreme, that, at some point, I feel it has to have a significant consolidation phase.

Below is a 3-year chart of gold versus US stocks (SPY), non-US stocks (EFA), emerging market stocks (EEM), and long-term US government bonds (TLT). Gold has absolutely crushed these other assets, and the gap has been accelerating in recent weeks.

Gold has crushed Stocks & Bonds

April 2025 portfolio position

Chicken Little remains positioned for imminent collapse in the stock market with a large short position in US equities. As noted above, I have sold my gold & silver position. I will be looking to re-enter precious metals and bitcoin at lower prices (if they occur).

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through March)	1.36%	-0.94%
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)	26.11%	186.85%

February 2025, Chicken Little Portfolio Performance

2025-03-06T05:26:00.000-08:00

The End of a Profligate Era

The raging bull market in US stocks will end, and so will the era of spending and profligacy. The coming era will reverse many important aspects of life. For some, extremely painful, and, for all, risky because of social upheaval.

From Flappers to Depression

The end of an era

In September 2020, the 10-year German government bond ("bund") yield was negative 0.70%. If you invested 100 Euros, you lost 7 euros over 10 years and got back 93 Euros a decade later.

Today, the rate on the 10-year bund is positive 2.83%. All around the world, interest rates are surging. The era of negative interest rates -- so widespread a few years ago -- looks to be an irrational, historical anomaly.

Chicken Little has long predicted the rise in real interest rates. Real rates will continue to increase, and, consequently, the entire world will change. We are in the early stages of change from profligacy to prudence.

	PROFLIGATE ERA	PRUDENT ERA
mood	take risk	be safe
consumers	buy	save
Route to wealth	borrow	hold cash

February 2025 performance

The Dow Jones Industrial Average lost 1.42% in February 2025. The Chicken Little Portfolio gained 0.05%. Through the end of February, the Dow has gained 3.22% while the Chicken Little Portfolio has lost 0.20%.

	Feb '25	YTD
Chicken Little	0.05%	-0.20%
Dow Jones Industrials	-1.42%	3.22%

February 2025 was a mixed month for investors. US stocks lost money, while stocks outside the US had modest gains. Bitcoin gave back some of its recent gains, while Long-term US government bonds returned over 5% in the month. Year to date, gold is the highest performer, followed by Non-US stocks and then long-term US Treasury bonds.

Asset	Symbol	Feb '25	YTD
Dow Jones Industrials	DIA	-1.42%	3.22%
Non-US Stocks	EFA	2.95%	7.90%
Emerging Market Stocks	EEM	1.15%	3.32%
US Long-Term Bonds	TLT	5.67%	6.19%
Gold	GLD	1.86%	8.73%
Bitcoin	BTC	-18.10%	-8.80%

March 2025 portfolio position

Chicken Little remains positioned for imminent collapse with a large short position in US equities. No change in position in February 2025.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through February)	-0.20%	3.22%
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)	24.17%	160.56%

January 2025, Chicken Little Portfolio Performance

2025-02-07T06:55:00.000-08:00

Chicken Little still scared.

The source of Chicken Little fears is government malfeasance in the form of overspending and loose monetary policy. My prediction was, and remains, rising real interest rates lead to asset market declines. All parts of this thesis have come true except for US stocks. Interest rates around the world up, non-US stocks flat, Chinese housing collapse, but US stocks continue to go up.

US Stocks are the last risky asset standing

Rising interest rates

My central thesis is that real interest rates will rise. Consider the case of Japan.

In 2016, I predicted that Japanese interest rates were at an historic low, and would rise. At the time that I made this prediction, the Japanese 10-year bond rate was negative 0.30% - yes negative. See post - "Regime shift in the Japanese bond market."

I was 100% correct in my prediction about Japanese interest rates. The 10-year Japanese bond rate has risen to positive 1.31% - the highest in fifteen years.

Japanese Interest Rates have Risen

What is next for Japanese interest rates? My prediction: much higher real interest rates are coming. Why? Because, inflation-adjusted, real rates are still negative.

JGB 10-year rate	1.31%
Inflation rate (January 2025)	2.70%
Real interest rate	-1.39%

The inflation-adjusted, real Japanese 10-year is still negative: -1.39%. Real rates over long periods of time have been positive 2-4%. However, markets tend to overshoot so real Japanese rates can move to above 5%.

The rise in real interest rates is just getting started.

The situation in the rest of the world is similar to that of Japan. Interest rates have risen a lot, especially in nominal terms, but real rates are going to go much higher. In a much higher real interest rate world, assets prices have to get crushed.

January 2025 performance

The Dow Jones Industrial Average gained 4.71% in January 2025. The Chicken Little Portfolio lost 0.25%. Another amazing month for US stocks and another stumble for Chicken Little.

	Jan '25	YTD
Chicken Little	-0.25%	-0.25%
Dow Jones Industrials	4.71%	4.71%

January 2025 was a great month for investors. Very tough to lose money by buying assets as all major asset classes rose. Bitcoin leading the pack with more than 11% in a month. Bitcoin continues to have been the best investment over every relevant time period. Gold coming in second in January with +6.74% and making new all-time highs on a daily basis.

Asset	Symbol	Jan '25	YTD
Dow Jones Industrials	DIA	4.71%	4.71%
Non-US Stocks	EFA	4.80%	4.80%
Emerging Market Stocks	EEM	2.15%	2.15%
US Long-Term Bonds	TLT	0.49%	0.49%
Gold	GLD	6.74%	6.74%
Bitcoin	BTC	11.35%	11.35%

February 2025 portfolio position

Chicken Little is not only positioned for collapse, but maintaining a big short position anticipating imminent financial disaster. The only move in the portfolio in January was to re-purchase a moderately-sized position in precious metals: gold & silver. I would like to own some crypto but believe there is still a huge speculative premium.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2025 (through January)	-0.25%	4.71%
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)	24.10%	203.20%

December 2024, Chicken Little Portfolio Performance

2025-01-08T20:51:00.000-08:00

The Sky is (really) going to fall.

It has been almost a decade since I earned the Chicken Little moniker (see post). In that decade, US stocks have produced one of the greatest bull markets in history. After a decade of being wrong about US stocks, I am more afraid of financial collapse than ever.

The Sky is (really) about to fall

Wrong about stocks, but ..

My central thesis is that real interest rates will rise and asset prices -- including US stock prices -- will fall. While I have been wrong about US stock prices, I have been right about the other parts of my prediction. Below are some of the highlights. I repeat these correct parts of the analysis because they are evidence (to me) that the thesis remains correct. Look out!

Interest rates will rise.

I have been arguing that real interest rates would rise since at least 2016. See my 2016 post: Chicken Little breaks up with bonds.

I have maintained the view that real interest rates will rise through almost every post. Here is the post from February 2022.

Interest rates have, in fact, risen to multi-decade highs. Both in US and around the world.

US 10-year yield at highest level in more than a decade

U.K. 30-year Gilt rates at more than 20 year high

Japanese 10-year rate at highest level in a decade

Government debt is a problem.

In 2019, I wrote that US deficits could hit $6 Trillion or more. Furthermore, I highlighted the historical first of huge, peacetime deficits during economic growth: "What's amazing is that our (2019) $1 Trillion deficit comes with no large-scale war, very low debt service cost, and no recession."

Recently, the world has caught up to my view on the US government debt. On September 16, 2024, the example, The Wall Street Journal Headlined FEDERAL DEBT IS SOARING.

The U.S. isn’t fighting a war, a crisis or a recession. Yet the federal government is borrowing as if it were. This year’s budget deficit is on track to top $1.9 trillion, or more than 6% of economic output, a threshold reached only around World War II, the 2008 financial crisis and the Covid-19 pandemic. Publicly held federal debt—the sum of all deficits—just passed $28 trillion or almost 100% of GDP.

So the WSJ reprinted my 2019 article 5 years later.

Real rates can go a lot higher.

The world has caught up to my view on debt and interest rates. I believe, furthermore, that real interest rates can go a lot high from here. For example, Japan still has an inflation rate higher than bond yields. So even though Japanese interest rates have risen dramatically, rates can (and will, I believe) go much, much higher.

In a much higher real interest rate world, assets prices have to get crushed. Chicken Little remains terrified.

December 2024 performance

The Dow Jones Industrial Average lost 5.13% in December 2024. The Chicken Little Portfolio lost 0.41%. For the year of 2024, the Dow rose 14.71% and while Chicken Little earned 3.30%.

	Dec 2024	2024
Chicken Little	-0.41%	3.30%
Dow Jones Industrials	-5.13%	14.71%

December 2024 was a negative month for all major asset classes. Long-term US Treasuries and US stocks were the worst performers losing over 5% in the month.

2024 was a positive year for most major asset classes. Bitcoin and gold were the best investments in the year. US stocks had strong gains, while stocks outside the US had modest gains. Long-term US treasury bonds lost 7.87% -- a very bad year.

Asset	Symbol	Dec 2024	2024
Dow Jones Industrials	DIA	-5.13%	14.71%
Non-US Stocks	EFA	-2.86%	3.60%
Emerging Market Stocks	EEM	-1.63%	6.54%
US Long-Term Bonds	TLT	-5.82%	-7.87%
Gold	GLD	-1.41%	26.66%
Bitcoin	BTC	-2.73%	121.91%

January 2025 portfolio position

Chicken Little has been scared (financially) for a decade. That fear escalated in December 2024 because of the global rise in interest rates.

I believe that the collapse that I have long feared is imminent. Because of this fear, I initiated a considerable short position in stocks, and sold all my gold, silver & crypto. I still believe in diversifying away from fiat currencies, so will look for a chance to re-enter precious metals and crypto.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
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)	24.42%	189.58%

November 2024, Chicken Little Portfolio Performance

2024-12-14T07:10:00.000-08:00

Chicken Little still scared of US Debt

The central thesis of Chicken Little has been that massive government debt will cause real interest rates to rise and, consequently, asset prices to fall. I am approaching an entire decade of being wrong about the US stock market, which continues to rise.

Powerful Bull Market shrugs off Debt

November 2024 performance

After President Trump's victory, the Dow Jones Industrial Average soared 7.03% in November 2024. The Chicken Little Portfolio lost 0.01%. Year to date, the Dow is up 20.91% while Chicken Little is up 3.73%.

	Nov 2024	YTD 2024
Chicken Little	-0.01%	3.73%
Dow Jones Industrials	7.03%	20.91%

November 2024 was an excellent month for US stocks and an historic month for crypto. Bitcoin surpassed $100,000 and remains the best performing asset over every time period since its creation. Any modest amount invested in bitcoin 10 years ago would have set an investor up for life.

It has been a good year for investors so far. Year to date, all major asset classes are showing positive returns except for long-term US Treasury bonds which have lost over 2% (including interest payments). Non-US stocks have lagged significantly behind US stocks. Gold has outperformed all assets except for crypto.

Asset	Symbol	Nov 2024	YTD 2024
Dow Jones Industrials	DIA	7.03%	20.91%
Non-US Stocks	EFA	-0.51%	6.65%
Emerging Market Stocks	EEM	-2.75%	8.31%
US Long-Term Bonds	TLT	3.32%	-2.17%
Gold	GLD	-2.73%	28.47%
Bitcoin	BTC	54.92%	128.14%

December 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. One trade in November: I have re-entered a modest position in crypto. Not because I expect short-term gains, but to continue to build up the non-fiat currency part of the portfolio.

US government debt continues to set new records every month. The most obvious solution (from the government's perspective), will be to inflate away the debt. Consider that the 20% cumulative inflation during the Biden administration reduced the real debt by 20%. Gold, silver, and crypto now make up 14% of the Chicken Little portfolio as a hedge against more government malfeasance.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through end of Nov)	3.73%	20.91%
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)	24.94%	205.23%

October 2024, Chicken Little Portfolio Performance

2024-11-12T17:29:00.000-08:00

Still out of sync with markets

Chicken Little continues to fear a debt crisis. Meanwhile financial markets of many types continue to soar.

Chicken Little fails while other get rich

October 2024 performance

The Dow Jones Industrial Average lost 0.60% in October 2024. The Chicken Little Portfolio gained 0.17%. Year to date, the Dow is up 12.97% while Chicken Little is up 3.74%.

	Oct 2024	YTD 2024
Chicken Little	0.17%	3.74%
Dow Jones Industrials	-0.60%	12.97%

October 2024 was negative month for most major asset classes. US stocks had very mild losses, non-US stocks had bigger losses, Long-term US Treasuries had a disastrous month, and gold was the biggest winner.

It has been a good year for investors so far. Year to date, all major asset classes are showing strong, positive returns except for long-term US Treasury bonds which have lost over 5% (including interest payments). Bitcoin and gold are the best performing assets.

Asset	Symbol	Oct 2024	YTD 2024
Dow Jones Industrials	DIA	-0.60%	12.97%
Non-US Stocks	EFA	-5.00%	7.19%
Emerging Market Stocks	EEM	-2.97%	11.37%
US Long-Term Bonds	TLT	-6.60%	-5.32%
Gold	GLD	3.87%	32.07%
Bitcoin	BTC	-0.37%	47.26%

November 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. Two changes in position to note.

First, Chicken Little has purchased some long-term US Treasury bonds yielding close to 5%. I have been predicted higher real interest rates for years, so this move may seem strange. However, at a yield of almost 5%, there is some return to compensate for the obvious risks; I am still underweight treasury bonds.

Note: I exited the last of my treasury bonds in March of 2020, when long-term US treasury rates were just above 1% (see post). Now that rates have risen 400 basis points, and some long-term treasuries have lost half their value, I re-enter with an undersized position.

Second, I am continuing to increase my precious metal position, and will add some crypto soon. This is primarily to provide an alternative to fiat currencies depending on how the looming debt crisis (that I fear) unfolds.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through Oct)	3.74%	12.97%
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)	24.95%	185.18%

September 2024, Chicken Little Portfolio Performance

2024-10-13T16:20:00.000-07:00

Right but still Wrong

'No one believes a liar even when they are telling the truth.'

- The boy who cried wolf

Many of my macroeconomic fears are now widely recognized, but markets do not appear worried. I continue to believe that US government overspending and Federal Reserve failures will lead to economic disaster. I remain essentially alone in crying wolf.

Wolf!

Government overspending

My financial fear is grounded in US government malfeasance. The US government is running a very large budget deficit. This overspending is taking place in a benign environment, consisting primarily of three factors.

1. Interest rates are low by historic standards, meaning the government interest payments are low.
2. The US is spending less on defense that it has in almost every year since World War II ended, and
3. The US is not (yet) in recession.

In spite of these financial tailwinds, we are overspending.

These should be the best days for US government finances, and, yet, we are overspending by historic amounts.

I have been pointing out the fiscal problem for years. In 2019, for example, I wrote that US deficits could hit $6 Trillion or more. Furthermore, I highlighted the historical first of huge, peacetime deficits during economic growth: "What's amazing is that our (2019) $1 Trillion deficit comes with no large-scale war, very low debt service cost, and no recession."

In recent months, many more people have been focusing on government overspending. For example, the Wall Street Journal now writes articles that say almost verbatim what I said five+ years ago. Here is an excerpt from the Wall Street Journal on October 8, 2024:

This October 2024 Wall Street Journal article says almost exactly what I noted in 2019; large deficits without war, recession, or high interest costs.

Higher Real Rates

The primary economic consequence of overspending should be higher real interest rates. As a proxy for real rates, I subtract the trailing 12-month Consumer Price Index (CPI) from the 10-year Treasury rate. For example the 10-year treasury today is 4.10, and the most recent CPI reading was 2.40%.

So the current real interest is, by this metric, 1.70%. There are other approaches to measuring real rates, and all measures paint the same picture.

In theory, government overspending creates competition between the government and the private sector for borrowing. With a lot of competition to borrow, the price of borrowing ought to rise. The price of borrowing is the real interest rate. So high government debt and deficits should, and usually do, lead to high real interest rates.

Real rates have been low- historically low

Rather than go higher, real rates have been historically low - until recently. Here is the full picture of real rates:

The blue line in the graph is the real rate. The real rate peaked at just under 10% in the early 1980s. It fell persistently for decades, and then was essentially zero from 2009 to the beginning of COVID. The massive response to COVID by spending and e-printing money led to a jump in inflation with a consequence push of real rates deeply negative.

In chart form, we can divide the periods in many ways. I have chosen World War II -> housing crisis, then from housing crisis up until the last two years of high inflation, those two high inflation years, and then finally this year.

	1953-2008	2009-2021	2022-2023	2024
real rate	2.56%	0.80%	-2.62%	1.20%
10-year	6.41%	2.35%	3.45%	4.15%
CPI	3.85%	1.55%	6.07%	2.95%

From World War II (1953 for the data) until the 2009 housing crisis, the real rate averaged 2.56%. Then from 2009-2021, the rate plunged toward zero with an average of 0.80%. For the period 2022-2023, inflation surged and real rates became extremely negative, averaging minus 2.62%. Recently the real rate has turned positive.

Real rates can go much higher

How high can real rates go? I think the answer is 10% or more. Real rates almost hit 10% in the early 1980s, and our government financial situation is much worse today. Given the 50+ year average of 2.56%, it seems very likely that real rates will exceed that historic average - easily moving toward 5%.

What does a world of 5% or higher real interest rates look like. The short answer: the opposite of the world we have lived in for the last fifteen years. Saving will be favored over spending, frugality and prudence over opulence and speculation.

September 2024 performance

The Dow Jones Industrial Average gained 1.94% in September 2024. The Chicken Little Portfolio gained 0.71%. Year to date, the Dow is up 13.65% while Chicken Little is up 3.56%

	Sept 2024	YTD 2024
Chicken Little	0.71%	3.56%
Dow Jones Industrials	1.94%	13.65%

September 2024 was a positive month for all major asset classes. Emerging market stocks, gold, and bitcoin, each returned in excess of 5% in the month.

It has been a very good year for investors so far. Year to date, all major asset classes are showing strong, positive returns except for long-term US Government bonds which, although positive, have returned close to zero. Bitcoin and gold are the best performing assets (by a significant margin).

Asset	Symbol	Sept 2024	YTD 2024
Dow Jones Industrials	DIA	1.94%	13.65%
Non-US Stocks	EFA	0.77%	12.83%
Emerging Market Stocks	EEM	5.70%	14.77%
US Long-Term Bonds	TLT	1.62%	1.38%
Gold	GLD	5.09%	27.14%
Bitcoin	BTC	7.03%	47.81%

October 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. No trades in the month of September. Gold position is larger because gold prices increased.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through Sept)	3.56%	13.65%
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)	24.74%	186.88%

August 2024, Chicken Little Portfolio Performance

2024-09-12T08:16:00.000-07:00

Chicken Little still Scared

It has been almost 10 years since my friend Paul Solman of PBS named me the 'chicken little of finance.' A decade later, I continue to fear that government malfeasance, in the form of loose money and too much spending, will create financial havoc. So far, the stock market is unconcerned.

Chicken Little approaching 10th birthday

August 2024 performance

The Dow Jones Industrial Average gained 1.95% in August 2024. The Chicken Little Portfolio gained 0.59%. Year to date, the Dow is up 11.48% while Chicken Little is up 2.83%

	August 2024	YTD 2024
Chicken Little	0.59%	2.83%
Dow Jones Industrials	1.95%	11.48%

August 2024 was a mixed month for major asset classes. International stocks and Bitcoin had significant declines, while other asset classes had modest gains.

Year to date, all these major asset classes are showing strong, positive returns except for long-term US Government bonds which have slipped modestly.

Asset	Symbol	August 2024	YTD 2024
Dow Jones Industrials	DIA	1.95%	11.48%
Non-US Stocks	EFA	-9.08%	1.80%
Emerging Market Stocks	EEM	0.97%	8.58%
US Long-Term Bonds	TLT	2.07%	-0.24%
Gold	GLD	2.09%	20.99%
Bitcoin	BTC	-11.36%	38.11%

September 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. One change in the portfolio positioning in the month; I doubled the gold position. Gold is at all-time highs, and ready, I believe, to move higher.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through August)	2.83%	11.48%
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)	23.85%	181.42%

July 2024, Chicken Little Portfolio Performance

2024-08-03T20:36:00.000-07:00

Can AI pay Government debts?

The US Government is overspending at an historic rate. Chicken Little believes the most likely end-game is for the bond market to choke off overspending by a rise in real interest rates. However, it is possible that AI, and technology generally, will make us so much richer that we can afford government spending and thereby avoid disaster.

Can AI feed the US Government?

US Government Debt is Historically Large

The US Government debt is at or near the highest level in history. Furthermore, the nature of spending and deficits has changed. From the beginning of the country until around 2003, Debt spiked during wars and then returned toward 0% of GDP (no debt) during peacetime.

Recently, politicians somehow figured out that, at least for some decades, the government could overspend every year, even in peacetime, without an immediate financial crisis.

First massive, peacetime explosion in US Debt

High debt is caused by non-defense spending
The cause of rising US government spending, and corresponding large deficits, is non-defense spending. Over the last several decades, defense spending has trended down; now below one-half of the level it was in the late 1960s. Over the same period, non-defense spending has approximately doubled (all as measured by % of GDP).

So the government is spending a larger part of the nation's output, and the mix has shifted dramatically from defense to non-defense.

What is the right mix of spending? At one level, that is simply a political choice. From a financial point of view, however, it is almost certain that, in the future, the US will be involved in large-scale wars. At that point, defense spending will increase signficantly, and the deficit and debt will also increase signficantly.

Higher non-defense spending, lower $ for military

Deficits are likely to increase significantly
In 2019, I predicted that US deficits would hit $3 trillion in a year, and could exceed $6 trillion (see post "Huge Deficits"). Soon thereafter, the annual US federal deficit did indeed hit $3 trillion. $6 trillion or higher are still entirely possible.
Massive deficits loom

The US should be running a big surplus now. We are spending very little on defense, interests cost are still low, and we are not yet in recession.

We are unprepared for a fiscal storm. When the storm comes in the worst case form of war, higher interest rates, and recession, the government will face very challenging financial constraints.

Can AI save us from financial doom?
Yes, AI can save us. Higher productivity, leading to higher real growth, can solve any fiscal problem. If AI and other new technologies can catalyze significantly higher productivity, we can pay off the national debt and enjoy our great lifestyles.

So far, however, there is zero statisical evidence that technology has kicked up productivity rates. In fact, productivity in the current period is among the lowest of any period post WWII. So zero evidence of technology is making us richer so far.

AI has not (yet) made us richer

July 2024 performance

The Dow Jones Industrial Average gained 4.45% in July 2024. The Chicken Little Portfolio lost 0.29%. Year to date, the Dow is up 9.35% while Chicken Little is up 2.23%

	July 2024	YTD 2024
Chicken Little	-0.29%	2.23%
Dow Jones Industrials	4.45%	9.35%

July 2024 was a strong month for major asset classes. Gold and Bitcoin had the best returns in the month gaining over 5%. Every major asset class was positive.

Year to date, all these major asset classes are showing strong, positive returns except for long-term US Government bonds which have slipped modestly. In short, it has been a great year (so far) to own risky assets.

Asset	Symbol	July 2024	YTD 2024
Dow Jones Industrials	DIA	4.45%	9.35%
Non-US Stocks	EFA	2.55%	8.49%
Emerging Market Stocks	EEM	0.84%	7.54%
US Long-Term Bonds	TLT	3.88%	-2.27%
Gold	GLD	5.37%	18.51%
Bitcoin	BTC	5.98%	55.81%

August 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. No change in the portfolio positioning in the month.

Unless productivity increases significantly, I continue to believe we are overspending ourselves to financial catastrophe.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through July)	2.23%	9.35%
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)	23.13%	176.03%

June 2024, Chicken Little Portfolio Performance

2024-07-02T07:55:00.000-07:00

Long-Term interest rates are rising

Chicken Little has been completely wrong about the US stock market for close to a decade. My central thesis has been, and remains, that real interest rates will rise, and asset prices will fall. While I have been completely wrong about stocks, I have been right about interest rates.

US Debt with (eventually) crush asset prices

Interest rate regime may have shifted globally

In 2016, I predicted the end of Japan's bond bull market. See "Regime Shift in Japanese Bonds."

I was 100% correct about Japanese interest rates. What does being right about Japanese bonds mean for investors in other markets? I believe that the long-term move away from easy money is underway and, consequently, I am not yet ready to abandon my bearish (chicken) stance.

Furthermore, my correct views on interest rates led me to sell 100% of my US bonds at great prices. Read these posts:

2016: Chicken Little sees the end of bull market in US bonds.

2019: Chicken Little has sold half of my US bond portfolio.

2020: Chicken Little has exited 100% of long-term US bonds.

June 2024 performance

The Dow Jones Industrial Average gained 1.15% in June 2024. The Chicken Little Portfolio lost 0.24%. Year to date, the Dow is up 4.69% while Chicken Little is up 2.52%

	June 2024	YTD 2024
Chicken Little	-0.24%	2.52%
Dow Jones Industrials	1.15%	4.69%

June 2024 was a mixed month for major asset classes. US and emerging market stocks were up in June as were long-term US Treasuries. International developed equity markets slipped, while bitcoin gave back over 8%.

Year to date, all major asset markets are up except long-term Treasuries, and crypto still the best performing asset class. Gold has had a very strong year with a return of over 12%.

Asset	Symbol	June 2024	YTD 2024
Dow Jones Industrials	DIA	1.15%	4.69%
Non-US Stocks	EFA	-1.80%	5.80%
Emerging Market Stocks	EEM	2.61%	6.64%
US Long-Term Bonds	TLT	1.47%	-5.92%
Gold	GLD	-0.13%	12.47%
Bitcoin	BTC	-8.64%	47.02%

July 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. Two trades in the month of June. Closed my short equity position with a modest loss, and closed my crypto position (for now) with a modest gain. I still like crypto over the medium- and long-term, just taking a break as I see if interest rates break out to new highs.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through June)	2.52%	4.69%
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)	23.48%	164.27%

May 2024, Chicken Little Portfolio Performance

2024-06-06T08:57:00.000-07:00

Can AI save us from Government profligacy?

The bull case for the economy and asset markets is that technology, particularly Artificial Intelligence, will save the financial day. The US government is overspending at an historic rate and, consequently, the cumulative US debt is at historic highs - exceeding the Debt/GDP levels at the end of World War II. Who will win? So far, AI.

Robots to the Rescue?

May 2024 performance

The Dow Jones Industrial Average gained 2.44% in May 2024. The Chicken Little Portfolio gained 0.52%. Year to date, the Dow is up 3.50% while Chicken Little is up 2.77%

	May 2023	YTD 2023
Chicken Little	0.52%	2.77%
Dow Jones Industrials	2.44%	3.50%

May 2024 was a bullish month across all major asset classes. While gains in the tech sector have been very strong in 2024, broader asset classes have had modest returns. Bitcoin continue to outperform all other investments over every significant time frame (1 month, 1 year, 5 years, etc.)

Asset	Symbol	May 2023	YTD 2023
Dow Jones Industrials	DIA	2.44%	3.50%
Non-US Stocks	EFA	5.06%	7.74%
Emerging Market Stocks	EEM	1.95%	3.93%
US Long-Term Bonds	TLT	2.85%	-7.28%
Gold	GLD	1.62%	12.62%
Bitcoin	BTC	6.64%	60.93%

June 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. One trade in the month of May - an increase in the modest short equity position. Crypto position is larger not because of a trade, but because the price of Ethereum went up a lot around the time of Ether ETF approval.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through May)	2.77%	3.50%
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)	24.26%	161.28%

April 2024, Chicken Little Portfolio Performance

2024-05-23T15:33:00.000-07:00

The Frog in the Pot?

The Chicken Little thesis remains unchanged for nearly a decade. That US Federal government, and non-US central banks, have taken actions that will cause a crisis. Overspending and e-printing money lead to short term (or medium term) positives with enormous risk. Real interest rates will, in this view, continue to rise until the crisis strikes.

Rising real interest rates will kill the economy

April 2024 performance

The Dow Jones Industrial Average lost 4.69% in April 2024. The Chicken Little Portfolio lost 0.38%. Year to date, the Dow is up 1.04% while Chicken Little is up 2.24%

	Apr 2024	YTD 2024
Chicken Little	-0.38%	2.24%
Dow Jones Industrials	-4.69%	1.04%

April 2024 was a broadly bearish month. Long-term treasuries had a very negative month losing 6.09% (in a month). The only winner in the month was gold, which continued to hit new all-time highs. Year to date, all major asset classes are positive except for long-term treasuries, which are having a very bad year.

Asset	Symbol	Apr 2024	YTD 2024
Dow Jones Industrials	DIA	-4.69%	1.04%
Non-US Stocks	EFA	-3.24%	2.55%
Emerging Market Stocks	EEM	-0.22%	1.94%
US Long-Term Bonds	TLT	-6.09%	-9.85%
Gold	GLD	2.99%	10.83%
Bitcoin	BTC	-9.30%	50.92%

May 2024 portfolio position

Like a stopped watch, the Chicken Little portfolio remains positioned for financial apocalypse. No change in position in the portfolio. Mainly in cash with a little gold and a little Ether and a modest short position.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through April)	2.24%	1.04%
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)	23.14%	155.05%

March 2024, Chicken Little Portfolio Performance

2024-04-07T15:35:00.000-07:00

Missing out on free money?

The Bull Market continued through the end of March 2024. Chicken Little remains scared of financial doom and continues to miss out on huge gains in the stock market. The pain trade remains painful.

Bear (and chickens) are hungry

March 2024 performance

The Dow Jones Industrial Average rose 2.24% in March 2024. The Chicken Little Portfolio gained 0.94% from its short-term treasuries, and being long a bit of gold and ethereum.

	Mar 2024	YTD 2024
Chicken Little	0.94%	2.63%
Dow Jones Industrials	2.24%	6.01%

March 2024 was a broadly bullish month. All major assets classes up solidly with bitcoin continuing to lead. The only loser, year to date, has been long-term Treasuries as interest rates have ticked up a bit.

Asset	Symbol	Mar 2024	YTD 2024
Dow Jones Industrials	DIA	2.24%	6.01%
Non-US Stocks	EFA	3.38%	5.99%
Emerging Market Stocks	EEM	2.73%	2.16%
US Long-Term Bonds	TLT	0.46%	-4.00%
Gold	GLD	8.67%	7.61%
Bitcoin	BTC	12.39%	66.39%

Brief version of the bear case

The US Federal Government is spending much more than its revenue. Consequently, cumulative US Debt is the highest in history in absolute dollars and percent of GDP.

The massive run up in debt is occurring in times of plenty. Unemployment is low, the US spends very little on the military.

We are spending 4% of GDP on the military, half as much as during President Reagan's term, and one-fourth as much as during the early parts of the cold war. Our primary nation-state competitors, Russia and China, are increasing military spending while we shrink.

Finally, the cost of servicing the debt is historically low because of the Federal Reserve's low interest rate policy. The Federal Reserve says it cut rates to help the economy; The direct effect of low rates is to hurt savers and help borrowers - the biggest borrower in the world is the US Government.

In 2023, the US government deficit was $1.7 Trillion or 6.3% of GDP. A massive deficit in the context of no recession, under investment in the military, and low interest cost expense.

What will happen when the US has a recession, increases spending on the military, and pays higher interest rates? The answer is massive, historic deficits (see post HUGE DEFICITS).

Are Chicken Little's fears correct?

Does it matter if my fears of financial collapse are correct? Yes. The world of high real interest rates, high unemployment, and depression will be unpleasant and may involve significant social unrest and warfare.

From a personal investment point of view, however, what matters is that I believe the bear case, not that is going to come true. The reason is that because I am afraid, I cannot own risky assets.

In November of 2016, I correctly predicted that Donald Trump's election would be good for stocks (see full post). Here is an excerpt:

The election of Donald Trump and Republican House and Senate is great news for US companies, and, as compared to Hilary Clinton, good news for the stock market. Thus, a Trump rally in stocks is rational.

Based on my bullish analysis of the 2016 election, I bought a small amount of stocks, but ending up making no money. Why did I make no money? Because I was a weak hand and every time there was some decline in stocks, I sold my holdings.

To make money, it is necessary, but not sufficient, to have conviction in your position. Because I fear a rise in real interest rates, and a fall in asset prices, I cannot own risky assets. My fears prevent me from making money on buying assets, even when I am correctly bullish as I was in 2016 in predicting the impact of Donald Trump on stock prices.

So right or wrong about the apocalypse, I sit in my financial bomb shelter cowering in financial fear.

April 2024 portfolio position

The Chicken Little portfolio remains positioned for financial apocalypse. Two small trades in March of 2024. Increased the position in gold and trimmed the ethereum position. ETHE, the ethereum ETF was $17 in January and $36 six weeks later in early March.

Previous month's report Subsequent Month's report

	Chicken Little	Dow Jones Industrials
2024 (through March)	2.63%	6.01%
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)	23.61%	167.60%