Line Crossed and New Line Drawn!
The Issachar Fund (LIONX) is 20% invested as of Friday, August 03, 2018. LIONX holds ETFs in these themes: 13% in Health Care, 4% Consumer Staples and 3% S&P 500 Value. During the last week, my “line was crossed” as positions came down to levels I was not willing to accept any further. Consequently, I sold all positions but purchased new ones that appear to be under accumulation.
It appears that there is a rotation out of Growth into Value and historically that usually occurs at the end of a Bull Market. Not necessarily a good sign. However, the market does not always give clear signals, nor does it ring a bell when the party is over. One must be vigilant and disciplined to stay abreast of the warning signs while ultimately seeking to avoid life-changing losses. I would rather miss an opportunity than lose money. If getting out too soon causes LIONX to under perform the market, then that may be the price we pay to stay in the game for the long run. I do not try to swing for the fences but seek to get on base and score when the opportunity presents itself. Managing money is a full-time job and it is one of my passions.
One area that does not seem to be affected by the Trade War Talks is Health Care. As Baby Boomers age, they tend to have more health-related issues requiring more medical attention leading to potentially more profits for the Health Care companies. Health care insurance premiums have been rising for years and does not appear to be slowing so the up-trend may persist for a while.
Consumer Staples are goods (food, beverages, tobacco, etc.) that people are unwilling to cut out of their budgets regardless of their financial situation. The Consumer Staple stocks seem to be under accumulation lately and that is an area that I am watching for clues as to where the market may be heading.
The Junk Bond market is trading near its all-time highs and that tells me that investor’s appetite for risk is still present. It also indicates that the market does not expect a high default risk. If the market sensed that we might be headed for a recession, then I believe junk bonds would likely anticipate a higher risk of default and would not be trading near all-time highs. These are all good signs that indicate to me that the market still has some gas left in the tank as we head into the November elections.
Bottom Line: The market is sending mixed signals but am optimistic that there may be some money left on the table to grab if we play our cards right. Could a Red Wave in November produce a spectacular 4th quarter rally?
Remember: Your Best-Interest is Also 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.)