The Issachar Fund (LIONX) is 52% Long and 18% Short as of Friday, August 17, 2018. LIONX holds ETFs in Health Care (45%), Various Stocks (7%) and an ETF Technology Short (18%). I increased exposure on the long side and hedged it with a Technology Short as this rally gets extended. Technology has churned and stalled on light volume while late-cycle sectors like Health Care, Utilities, Real Estate and Consumer Staples have picked up steam. If things go as planned, the Hedge will be temporary. If not, I expect the Hedge to dampen downside volatility.
LIONX holds a total of 7% in five stocks that have great fundamentals with attractive chart patterns. I would like to increase the number of individual stocks we are holding if the market continues to advance. The S&P 500 Index is slightly above an all-time-high, but volumes are light and Price to Earnings Ratios (P/E) are stretched so am cautiously optimistic.
The FAANG Stocks (Facebook, Apple, Amazon, Netflix and Google) led the market higher until they peaked as a group in the middle of June. Facebook and Netflix were darlings among many investors, but they are now down about 20% each from their highs and they are still trending lower. I like to buy up-trending charts with good fundamentals and get rid of them as sell signals are triggered. I have never believed in the Buy and Hold philosophy because I have seen Bear Markets produce Life-Changing Losses that forced retirees back to work. I have found a strategy for managing risk that has worked for me since 1990 and I simply want to share it with you in LIONX.
The dollar continues higher and that is putting downward pressure on the Emerging Markets as their dollar denominated debt gets more expensive to repay in local currencies. The Fed has indicated that they plan to raise rates to dampen the growth that the Trump policies are creating. If the Fed decides to not raise rates at their next meeting, then I would expect to see global markets rally and the dollar would likely stop its advance. It appears that capital is flowing out of China, Japan, Europe and Latin America and finding a happier home here in the US. I do not see any opportunities outside of the US that look attractive to me currently. I am expecting Trump to cut a favorable deal with China before the November elections. That would set the tone for a “Red Wave” of Republicans maintaining their majorities in the House and Senate. However, I make daily decisions based on what I see in the charts and not what I think might happen.
Oil and Gold continue to decline as the dollar advances. 1 Bitcoin is equal to about 6,360 dollars which is down about 65% from the Bitcoin high in December of 17,900. There are now about 2,164 crypto-currencies and Bitcoin is just one of them, so buyer beware. I have never owned any Bitcoins, nor do I plan to in the foreseeable future. There might be a time for crypto-currencies but now is not the time, in my opinion.
Junk bonds continue to advance with the market and this indicates to me that investors have a “risk on” attitude that it is still safe to get in. The Advance-Decline Line is also confirming that “breath” is still supportive. However, some index P/E ratios are a little extended, so I would not be surprised to see a little price consolidation.
Bottom Line: Late-Cycle and Small-Cap stocks appear to be “moving on up” and under accumulation so that is where I am positioned. I am cautiously optimistic and remain focused on the Bottom Line. If you are a shareholder in LIONX, Thank You! If you are not, please consider giving me a chance to earn your trust.
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.)