The Issachar Fund (LIONX) is 90% invested as of Thursday, June 07, 2018. Here are the ETF themes that LIONX owns: Small-Cap (35%), Mid-Cap (20%), Technology (15%), Health Care (10%) and the US Dollar (10%).
Here is My Thesis for being long. I believe that the TrumpOnomics (Lower Taxes and Less Regulation) will be good for America and certain sectors/themes will do better than others. I believe that a low interest rate environment is behind us and the Fed will raise rates 25 bps at their next three Fed meetings to calm inflation fears.
The Russel 2000 Index (Small Cap) has broken out of its trading range peak (January 23, 2018) and it continues to trend higher. However, the S&P 500 is still trading within its 10.10% peak to trough decline from 1/26/18 to 02/08/18. I believe that the S&P 500 Index will eventually break out of its trading range and head higher like the Russell. However, I expect the Russell to maintain leadership because I expect the dollar to continue trending higher. A strong dollar historically hurts the earnings of larger multi-national stocks and has little affect on Small-Cap stocks. Large-Cap stocks typically lose money when they repatriate their weaker currency foreign profits into stronger currency dollars and therefor they tend to be less attractive to investors on a risk-adjusted basis.
Since the recent bottom in the middle of April, the US Dollar has been trending nicely higher with a few minor pull-backs. Currency trends tend to persist longer than equity trends and I expect the dollar to continue trending higher mainly because Trump is doing what he promised. Trump said he wants to Make America Great Again and I believe that smart money is Coming to America because they see the potential. Money typically goes where it is treated best. Many foreign investors are converting their currencies into dollars to invest in America and that supports a strong dollar. European Government Bond Yields are also very low compared to a relatively safer 3% US Government Bond so smart money is seeking higher yields with lower risk. Again, I expect the dollar to continue higher on a relative basis baring a major economic event.
Tidbits: Microsoft, Apple, Netflix, Amazon (MANA) accounted for over 68% of the S&P 500’s total return last year. The unemployment rate fell to 3.8%, the lowest level since 2000. African-American unemployment fell to 5.9%, its lowest level since 1972. Average hourly earnings rose slightly in May to a 2.7% year-on-year gain, outpacing inflation. 2nd Quarter GDP is now estimated to be growing by 4.8% according to the Federal Reserve Bank of Atlanta.
Bottom line: I feel more optimistic than I have been since January, but my emotions can easily be overruled by the charts because they tell the truth if you have the courage to Believe. (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.)