The Issachar Fund (LIONX) is 50% invested as of Friday, August 10, 2018. LIONX holds ETFs in Health Care (30%) and Consumer Staples (20%). I added to the Health Care and Consumer Staples positions and sold the Value ETF. The Health Care sector continues to advance as Baby Boomers will likely need more medical attention as they age. Health stocks seem to be less affected by Trade War Fears and a rising dollar than other areas of the market. However, if the market can not break out above the January high on above average volume then I would not be surprised to see the Health stocks get hit with some profit-taking/short selling. If this happens, I will do my best to manage the risk seeking an attempt to minimize losses.
The dollar rallied over 1.3% on Thursday and Friday as Trump imposed additional sanctions on Turkey for not releasing an Evangelical Pastor held in prison. The Turkish Lira and the Euro dropped precipitously on fears of an economic crises/European bank failures. This sent shock waves through the US Stock Market. US Treasuries have rallied nicely in a possible flight to safety trade. Gold continues to decline as the dollar rises. If Gold were rallying with Treasuries then I might be more concerned but for now I am just being patient. I believe these fears will be allayed shortly and the market will eventually break out of this trading range we have been stuck in since January. Maybe the market will break out ahead of the November elections if the market perceives a Republican Red Wave?
Small Caps did not decline as much as the S&P 500 Index on Friday as they tend to be less impacted by a rising dollar. A rising dollar generally causes the prices of goods exported to be more expensive to foreigners, so they will likely buy less. This reduced buying could cause S&P 500 profits to come in less than expected resulting in steep stock price declines. However, Bull Markets are known to climb a “wall of worry” so I am being patient and disciplined looking for that “fat pitch” to come across the plate. I have found that the “easy money” is made in short spurts but you must always keep your eye on the ball to stop the market from trying to “steal” your profits.
Bottom Line: Volume is light (below average) which is typical for August and huge stock Buy-Backs continue to provide support for stock prices. We are in a Trading Range waiting for some catalyst to send the market higher or the Shorts to take us lower. My job is to manage the risk and that is what I love to do. I am optimistic as we near the 4th quarter. Please share this with a friend who might benefit from my risk-management approach.
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.)