The Issachar Fund (LIONX) is about 90% invested in 48 growth stocks as of June 14, 2020! (Listen to this blog/podcast). Tech stocks hit an all-time high last Wednesday then dropped about 5% on Thursday on above-average volume then finished Friday with a small 0.80% bounce higher on above-average volume. Thursday was a little scary to watch, but it may have been needed to knock a little froth off the market.
I am still finding leading growth stocks with attractive fundamentals and technical chart patterns to buy, so that tells me the growth stock uptrend may still be intact. There has been a shift from growth to value stocks in the last few weeks, but I believe the beaten-down laggard value stocks may have caught up and now may take a little rest if growth swings back in favor.
If I am wrong, I will do my best to follow my discipline and raise cash as needed, seeking to avoid life-changing losses. Everyone has a threshold of pain or a line in the sand where they must sell. I believe the key to long-term financial success is to know where your line in the sand is and what you will do if it is crossed. No one cares more about your money than you do, and hope is not a strategy. (There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)
The Fed increased its balance sheet last week by another $72 billion. Since March 1 of this year to last Friday, the Fed's balance sheet has grown from $4.1 trillion to $7.1 trillion, which is a 72% increase. The Fed creates this money out of thin air and uses some of it to buy bonds from large institutions. A lot of this free money eventually finds a happy home in the stock market.
The Fed also creates money to buy the bonds the Treasury floats in the market and this is often called debt monetization. Congress votes to spend trillions, knowing the Fed will monetize the debt if enough buyers' "bidders" do not show up to buy this newly created issuance of government debt. Our national debt is now over $26 Trillion!
I do not see a conceivable way we will ever pay this off which amounts to about $79,000 per American citizen. If you want to see a website of debt that will blow your mind, check out this U.S. Debt Clock site. I believe excessive QE creation is the main reason why we are seeing a V-shaped recovery in the stock market. However, I believe we will not see a V-shaped recovery in the economy. Therefore, I believe that it is a stock pickers market, and stocks that have consistently grown earnings and sales over the last three quarters will continue to attract capital and lead the market higher.
Bottom line: I expect the laggard value stocks to take a back seat to the leading growth stocks. I believe the leaders were not being sold/distributed last week, but rather, buyers slowed their purchases. This appears to be a healthy dose of growth stock consolidation, in my opinion. However, 5% daily declines must be taken seriously.
I like to buy the "tennis ball" stocks that bounce higher and try to avoid the "egg stocks" that just sit there looking broken. I believe the Fed has our back, and that gives me the conviction to be 90% invested. I also believe God has His hand on America, and He holds every president in the palm of His hand. Pray with me for the men and women who work hard to protect our freedoms. Thank you for your trust and business, and may God bless you!
"In the Lord's hand, the king's heart is a stream of water that he channels toward all who please him" (Prov. 21:1, NIV).
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Investors should carefully consider the investment objectives, risks, charges and expenses of the Issachar Fund. This and other important information about the fund are contained in the prospectus, which can be obtained by calling 1-866-787-8355 or visiting LIONX.net. The prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., member FINRA/SIPC. Horizon Capital Management Inc., (HCM) is not affiliated with Northern Lights Distributors, LLC. Important Risk Information: Mutual funds involve risks including the possible loss of principal. An investment in the fund may not be appropriate for all investors. The fund may hold cash positions when the adviser feels that the market is not producing returns greater than the short-term cash investments in which the Fund may invest. There is a risk that the sections of the market in which the fund invests will begin to rise or fall rapidly, and the fund will not be able to sell stocks quickly enough to avoid losses or reinvest its cash positions into areas of the advancing market quickly enough to capture the initial returns of changing market conditions. The adviser's judgment about the attractiveness, value and potential appreciation of particular asset classes and securities in which the fund invests may prove to be incorrect and may not produce the desired results. Past performance is no guarantee of future results. For more information on LIONX, please visit LIONX.net. NLD Review Code: 3671-NLD-6/15/2020
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