A Line has been drawn!
The Issachar Fund (LIONX) is 48% invested as of Friday, July 27, 2018. LIONX holds ETFs in these themes: 20% in Health Care, 18% in Small-Cap Growth, 5% in Online Retail and 5% in Large-Cap Growth. However, the line has been drawn and LIONX could be taking action very soon.
Facebook and Netflix experienced steep declines after reporting 2nd quarter earnings last week. This negative reaction to the high-fliers is a cause for concern and should not be taken lightly. LIONX did not own these stocks but we felt the collateral damage in our ETFs.
Small-Caps and Health Care have lead the market this year, but we may be seeing some signs of a topping in these areas. Small-Caps were seen as a huge beneficiary to the Trump Tax Cuts, Deregulation and a strong dollar but that trade may be over. Maybe they are just taking a breather as all things with life must breathe. Maybe it is a sign of a market top? No one knows but following a sell discipline is one way to take the emotions out of investing. I believe every buy should accompany a sell point or a “line in the sand” if you will. Fear and greed can be two powerful emotions that many investors struggle with, so I encourage you to seek Wisdom.
As seen below in the Performance Report, LIONX is up 2.81% YTD while the S&P 500 Index is up 6.55% but LIONX has taken far less risk than buying and holding the Index. The Maximum Loss YTD for LIONX is 3.39% verses 10.10% for the Index. The main take-away is that risk is actively managed in LIONX and no one is managing the risk in a buy and hold Index strategy. In other words, the Index will stay fully invested in a Bear Market and never go to cash. LIONX seeks to avoid the major declines and stay invested in the up-trends. All of my invest-able assets are in LIONX, so I have incentive to succeed in the long-run.
The S&P 500 Index hit the upper range of stiff-resistance last week as the potential catalyst of a robust 2nd quarter GDP growth figure came in slightly less than the market was expecting at 4.1%. Since we did not penetrate the resistance high reached on 1/26/18, we may have to trade sideways for a while or we may be headed lower to test support. My gut tells me that we will eventually break resistance because of the Trump momentum but there could be lots of pain if I am wrong. My advice is to have a plan and stick to it!
On a short-term basis, the relative strength of Growth verses Value Stocks has shifted to favor Value over Growth. If this trend persists, we could see a mini-Bear market or a “teddy” Bear market develop.
Bottom Line: I believe the market is at a critical juncture and could turn ugly fast so be prepared. Draw a line in the sand and take action if the line is crossed because no one cares more about your money than you do.
Your Best-Interest is My Best-Interest!
(Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)