THE IXTHYS LETTERIssue 3 / December 2015 WHAT IS IXTHYS? IXTHYS is Greek for “fish,” a symbol of both sustenance and provision. As a company, IXTHYS is both an investment advisory

THE IXTHYS LETTER Issue 3 / December 2015

WHAT IS IXTHYS?

IXTHYS is Greek for “fish,” a symbol of both sustenance and

provision. As a company, IXTHYS is both an investment advisory

service and a Personal Finance System™ designed to help everyone

get out of debt, invest wisely, maximize income and build lasting

wealth.

Q: How does IXTHYS find its investment opportunities?

A: Every day we scan the markets for companies with strong organic

growth, trading at a reasonable price, with competent management

and high ethical standards. We time our entries using technical

analysis and hold as long as the company continues to perform.

Q: How does IXTHYS help me during market downturns?

A: Every subscriber has access to our IXTHYS Market Direction

Indicator™ (MDI) which alerts to an oncoming bear market with 91%

accuracy. We use the MDI to move funds into the IXTHYS Safe

Haven Portfolio™ which allows us to profit from market corrections.

“Honor the Lord with your wealth, then your barns

will be filled with plenty.” – Proverbs 3:9

IN THIS ISSUE

1. How to Use the IXTHYS

Letter

2. IXTHYS Market Direction

Indicator™

3. Current Market

Commentary

4. Highlighted Investments

for September

5. Current IXTHYS Portfolio

with buy-sell-hold signals

6. Past Performance

Statistics

7. Educational Article

8. Inspirational Thought of

the Month

HOW TO USE THE IXTHYS LETTER

1. Check the IXTHYS Market Direction Indicator™ (MDI) and Market Commentary sections so you

know what kind of market we are currently in. Any change in the MDI signal between monthly

updates will be emailed to subscribers.

2. Read the instructions given with The IXTHYS Portfolio™ which are based on the current MDI

signal. Adjust your current holdings accordingly. If you are new to The IXTHYS Letter, consider

buying one or more of the holdings in The IXTHYS Letter as directed (those with a “Buy” rating).

Consider adding to any IXTHYS Portfolio companies you already own that have a “buy” rating and

selling any that have a “Sell” rating. Note that we hold up to 18 positions in The IXTHYS

Portfolio™, depending on market conditions, so determine your position size on this basis.

3. Read though the Highlighted Investments for this month to see whether these investments fit your

own investing style and risk tolerance.

4. If the IXTHYS MDI™ signals that we are in a bear market, consider reducing your positions in The

IXTHYS Letter (we recommend 50% of your initial investment) and putting any uninvested cash

into the IXTHYS Safe Haven Portfolio™ as directed. There are 8 Safe Haven positions so be sure

to divide this univested cash by 8 and put an equal amount into each position.

5. The IXTHYS Plan for Personal Finances™ is Dr. Carr’s method for stewarding your personal

finances. It is intended to help you increase your income, multiply that increase, and build lasting

wealth through strategic investments. This section of The IXTHYS Letter is under development,

but in future issues you will have access to short videos that explain the various components of the

Plan. You can learn more about the IXTHYS Plan by watching this introductory video: CLICK

HERE

IXTHYS MARKET DIRECTION INDICATOR™

Current Market Direction Indicator™: DOWN MARKET.

Date of signal: September 21, 2015.

MDI Signal Strength: -0.28. (Last update: 10/31/15) The range

of the MDI Signal is from +5.0 to -5.0. A cross of the 0-line indicates

a shift from UP to DOWN or DOWN to UP.

Date of previous signal (UP MARKET): January 9, 2012.

Gain/Loss of that signal: +51.6%

Please note that any change in the MDI between now and the next

issue of The IXTHYS Letter will be sent to you as an alert by email.

IXTHYS MARKET COMMENTARY

The MDI Signal Strength has risen from -0.72 in our last issue to -0.28 in this issue. This rise reflects the

recent bounce in the markets since hitting a low at the end of September. October’s climb of +8.2% is one of

the strongest on record. Historically, a strong October spells a bullish market into January, so look for more

strength ahead. However, the S&P is now near strong resistance at 2120 and this may put the brakes on the

rally for the short-term. The 12/4 jobs report, along with a number of other key economic indicators and

speeches due this week, will likely set the tone for the rest of the month. Investors are concerned about a

possible rate hike from the Fed, but signs the economy is stronger than expected, which might bend the Fed’s

hand, should be met by investors hungry for real growth. We haven’t seen much in recent months.

Our thesis remains intact: that the recent market weakness is a correction in an overall cyclical bull market.

We’ve already seen the dominant uptrend resume, and we should soon see the MDI reverse its signal to an UP

MARKET. We continue to advise caution until the MDI reverses course, however.

IXTHYS INVESTING ADVICE

Given current market conditions, we consider it best to do the following:

Maintain 50% core positions in The IXTHYS Portfolio™ stocks

Consider adding shares of our highlighted stock(s) up to a 50% position size

Put any additional cash to work in the IXTHYS Safe Haven Portfolio™

Current IXTHYS Market Direction Indicator™ Chart

Questions? Contact Us

www.ixthysletter.com

[email protected]

THE IXTHYS PORTFOLIO™

The following investments are designed for long-term holds in an uptrending market. We always hold a core position in

each company in the portfolio until the key factors that caused us to buy the stock (see the free report, “The 5 Keys To

Successful Investing”) no longer obtain. During bear market signals from the MDI, we reduce our size in these stocks and

put the cash, along with any uninvested cash, into the IXTHYS Safe Haven Portfolio™.

Changes since the last update: Note: with the MDI signalling a down market, any new positions should be at 50% position

size only.

Last update: 11/30/2015

THE IXTHYS PORTFOLIO

Symbol Company Entry Date

Entry Price

Current Price

Div'd ROI Industry Type of Position

B-S-H

LUV Southwest Airlines 24-Oct-

12 8.81 45.88 0.25 423.6%

regional airlines

growth-value

Hold

TSO Tesoro Corporation 7-Feb-

14 47.92 115.17 2.95 146.5% oil refining value Hold

BBY Best Buy 10-Feb-

14 24.51 31.78 1.92 37.5%

electronics retail

value Buy

SCS Steelcase 16-Oct-

14 15.42 20.00 0.54 33.2% office furniture value Buy

CYBR CyberArk Software 11-Feb-

15 41.94 43.29 0.00 3.2% cyber security growth Buy

MBLY Mobileye 1-Apr-

15 41.98 43.60 0.00 3.9% driverless tech

IPO - growth

Buy

TSLA Tesla Motors 7-Apr-

15 202.51 230.26 0.00 13.7% electric cars growth Buy

EFOI Energy Focus 17-Jun-

15 7.25 16.01 0.00 120.8%

low-energy lighting

IPO - growth

Buy

GLOB Globant 1-Oct-

15 30.76 35.16 0.00 14.3% IT services growth Buy

NICE NICE Systems 2-Nov-

15 62.40 61.47 0.16 -1.2%

data management

growth Buy

AVT Avnet, Inc. 19-Nov-

15 45.61 45.32 0.17 -0.3%

electronics wholesale

value Buy

Current MDI Signal % Cash Sources of Cash Directions for Cash

DOWN MARKET 69% of total

Portfolio 50% in 11 core positions

and 7 uninvested positions

50% into any new position and the rest into the IXTHYS Safe Haven

Portfolio™

THE IXTHYS SAFE HAVEN PORTOLIO™

The MDI has signalled a DOWN MARKET as of 9/21/15. We therefore recommend putting all free cash into The

IXTHYS Safe Haven Portfolio™. The Safe Haven Portfolio is desiged to reduce portfolio drawdowns and profit

from market downturn. Note that The Safe Haven Portfolio will collect dividends over time.

From 9/21/20015 to 11/30/2015 (last update)

THE IXTHYS SAFE HAVEN PORTFOLIO

Symbol Company Entry Date

Entry Price

Current Price

Div'd ROI Industry Type of Position

B-S-H

TLT 20+ Year Treasury

Bonds 22-Sep-

15 121.44 121.45 0.53 0.4% Bonds Safe Haven Buy

ZROZ 25+ Year Zero Coupon Bonds

22-Sep-15

111.42 111.40 0.73 0.6% Bonds Safe Haven Buy

IEF 7 - 10 Year Treasury

Bonds 22-Sep-

15 106.80 106.40 0.32 -0.1% Bonds Safe Haven Buy

GLD SPDR Gold Shares 22-Sep-

15 108.49 101.92 0.00 -6.1% Commodities Hedge Buy

FXY Japenese Yen

Currency 22-Sep-

15 80.57 78.74 0.00 -2.3%

Foreign Currency

Safe Haven Buy

XLU Utilitiy Stocks ETF 22-Sep-

15 42.21 42.82 0.00 1.4% Utilities Safe Haven Buy

KXI Consumer Staples

Stocks ETF 22-Sep-

15 88.10 93.52 0.00 6.2%

Consumer Staples

Safe Haven Buy

RWM Short Russell 2000 22-Sep-

15 62.37 59.20 0.00 -5.1%

Bear Russell 2000

Hedge Buy

IXTHYS NEW HIGHLIGHTED INVESTMENTS

The following company is brought to you as suggested new entries in The IXTHYS Portfolio™. All information

presented here is for informational purposes only. Please do your own due diligence before investing. NOTE:

with the MDI signalling a DOWN MARKET, we recommend buying only a 50% position at this time.

STOCK OF THE MONTH: Ares Capital Corporation (Nasdaq: ARCC)

Industry: Private Equity Investments

Market Cap: $5.0B

Dividend: 9.6%

Position Type: Value

Business Profile: Ares Capital was founded in 1997 in Los Angeles as a multi-asset credit, private equity and real estate

fund. Today the company has $92Billion under management and stands as the largest publically traded “Business

Development Company” (BDC) in the U.S. About 65% of the fund is in high-yield bonds and middle market loans, and the

rest in energy assets and real estate. The company takes a conservative approach and relies on the expertise of over 800

analysts and managers. Ares makes loans to only 4% of the potential clients it vets, a sign that it is very selective. Gains

for shareholders largely come from dividends, fees and interest, but capital gains are also aimed at with some of their

private equity investments.

Analysis: This is a great value play, with shares trading at a low PE of 9.6 and a low Price to Book ratio of 0.9. All

analysts rate the company a “buy” or better, with a consensus price target of 17.60, or +11.4%. When added to the current

dividend, this makes a total annual return of 21%. As the US economy heads into a likely rate-hike cycle, we should see

investors plough into stocks like ARCC in search of higher yields. The fact that Goldman Sachs recently launching a BDC

of its own shows that companies like Ares should come into favor with investors. The company also has been beating Wall

Street income estimates. Its recent quarter of $0.42 per share beat the Street’s prediction by $0.04 or roughly 11%.

Moreover, the company is closing down one of its lower yield funds and beginning to ramp up a new program aimed at

second mortgages for highly qualified borrowers. This move, while adding some risk, will produce even more income.

IXTHYS WATCH LIST

The following companies are brought to you as part of our ongoing research process. These are companies that

have passed most or all of our financial and ethical filtering process but for various reasons are not yet ready

for long-term investments. They remain “stocks of interest.”

THE IXTHYS PLAN FOR PERSONAL FINANCES™

The IXTHYS Plan for Personal Finances™ is a system developed by Dr. Thomas Carr. It is based on a passage

from one of the Apostle Paul’s letters (2 Corinthians 9:6-11). The IXTHYS Plan is summarized by the three boxes

below. Whereas most personal finance plans teach you to live small, cut back, save, and hope for the best, Dr.

Carr’s system teaches the 7 essential skills needed to increase your income, multiply that increase, and invest it

strategically in order to build life-changing, long-lasting wealth.

In future issues of The IXTHYS Letter, you will learn more about this system and how God wants to partner with

you as your steward your finances toward the fulfillment of the dreams He has placed in your heart!

The IXTHYS Plan video: CLICK HERE

IXTHYS FINANCIAL WISDOM

In this final section of The IXTHYS Letter, we bring you nuggets of financial wisdom from some of the world’s

greatest thinkers, both past and present. This month we bring you wisdom from one of the world’s greatest

investors, Peter Lynch.

In the early 1980s, Peter Lynch was fast becoming one of the most famous investors in the world, and for a very good reason – when he took over the Fidelity Magellan mutual fund in May of 1977 the assets of the fund were $20 million. He proceeded to turn it into the largest mutual fund in the world, outperforming the market by a mind-boggling 13.4% per year. Lynch accomplished this by using very basic principles, which he was happy to share with just about anyone. Peter Lynch firmly believed that individual investors had inherent advantages over large institutions. Large institutions are largely shut out of smallcap stocks, low-volume stocks, and stocks that fly under the radar. But often those are the areas where the greatest investments lie hidden. Lynch’s system for picks such stocks can help you find them.

The Lynch Philosophy

Once his stellar track record running the Magellan Fund gained widespread attention, Lynch wrote several books outlining his philosophy on investing. They are great reads, but his core thesis is best summed up in his first and bestselling book, One Up on Wall Street. That book can be summed up with three main tenets: only buy what you understand, always do your homework, and invest for the long run.

1. Only Buy What You Understand

According to Lynch, our greatest stock research tools are our eyes, ears and common sense. Lynch was proud of the fact that many of his great stock ideas were discovered while walking through the grocery store or chatting casually with friends and family. We all have the ability to do first-hand analysis when we are watching TV, reading the newspaper, or listening to the radio. When we're driving down the street or traveling on vacation we can also be sniffing out new investment ideas. After all, consumers represent two-thirds of the GDP of the United States. In other words, most of the stock market is in the business of serving you, the individual consumer - if something attracts you as a consumer, it should also pique your interest as an investment.

2. Focus on Fundamentals

First-hand observations and anecdotal evidence are a great start, but all great ideas need to be followed up with smart research. Don't be confused by Peter Lynch's homespun simplicity when it comes to doing diligent research – rigorous research was a cornerstone of his success. When following up on the initial spark of a great idea, Lynch highlights several fundamental values that he expected to be met for any stock worth buying:

Percentage of Sales: If there is a product or service that initially attracts you to the company, make sure that it comprises a high enough percentage of sales to be meaningful; a great product that only makes up 5% of sales isn't going to have more than a marginal impact on a company’s bottom line.

PEG Ratio: This ratio of valuation to earnings growth rate should be looked at to see how much expectation is built into the stock. You want to seek out companies with strong earnings growth and reasonable valuations - a strong grower with a PEG ratio of two or more suggests that earnings growth is already built into the stock price, leaving little room for error.

Favor companies with a strong cash position and below-average debt-to-equity ratios. Strong cash flows and prudent management of assets give the company options in all types of market environments, even recessionary.

3. Invest for the Long Run

Lynch has said that "absent a lot of surprises, stocks are relatively predictable over 10-20 years. As to whether they're going to be higher or lower in two or three years, you might as well flip a coin to decide." It may seem surprising to hear such words from a Wall Street legend, but it serves to highlight how fully he believed in his philosophies. He kept up his knowledge of the companies he owned, and as long as the story hadn't changed, he didn't sell. Lynch did not try to time the market or predict the direction of the overall economy.

In fact, Lynch once conducted a study to determine whether market timing was an effective strategy. According to the results of the study, if an investor had invested $1,000 a year on the absolute high day of the year for 30 years from 1965-1995, that investor would have earned a compounded return of 10.6% for the 30-year period. If another investor also invests $1,000 a year every year for the same period on the lowest day of the year, this investor would earn an 11.7% compounded return over the 30-year period.

Therefore, after 30 years of the worst possible market timing, the first investor only trailed in his returns by 1.1% per year! As a result, Lynch believes that trying to predict the short-term fluctuations of the market just isn't worth the effort. If the company is strong, it will earn more and the stock will appreciate in value. By keeping it simple, Lynch allowed his focus to go to the most important task – finding great companies.

Lynch coined the term “ten-bagger” to describe a stock that goes up in value ten-fold, or 1000%. These are the stocks that he was looking for when running the Magellan fund. Rule No.1 to finding a ten-bagger is not selling the stock when it has gone up 40% or even 100%. Many fund managers these days look to trim or sell their winning stocks while adding to their losing positions. Peter Lynch felt that this amounted to "pulling the flowers and watering the weeds".