Here is a link to the latest 4th Quarter Issachar Fund Fact Sheet
The Issachar Fund (LIONX), is 70% invested in a group of growth stocks with a 30% Short in technology. I reduced exposure last week to lock in profits as I believe the market appears ready for a pull-back. No one that I know has ever gone broke taking profits. I added a 30% technology index short as I believe stocks look a little extended and could be subject to some profit taking so this short is designed to potentially minimize volatility. The market is heading into earnings season and I do not like to hold stocks through earnings, so the earliest reporting stocks were the first to be sold. I have learned that the risk of holding stocks through “earnings” is a little too “rich for my blood”, so I prefer to sell and not take that chance. I am still bullish into the November election, but I do not expect the market to advance in a straight line so “wiggles” are expected. I believe corrections are healthy and they can provide opportunities to get back into stocks that meet my fundamental and technical criteria. The technology index ran out of gas on Friday as the index finished in the red on above average volume, so caution is warranted. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The Fed reduced its balance sheet last week by $24 Billion! From 8/30/19 to 12/31/19, the Fed grew its balance sheet by $414 Billion and I believe most of that “newly created money” found its way into the stock and bond market bidding up prices. I also believe that when the Fed reduces its balance sheet like it did last week, prices tend to fall as “liquidity” dries. Liquidity is nice when it is increasing but not too many investors like it when liquidity is shrinking. Liquidity to the market is like adrenaline in the blood. I believe the Fed was very concerned about potential “blow ups” in the Repo (overnight institutional lending) market going into 12/31/19 so they “juiced” their balance sheets to mitigate some of the potential risks they were seeing. Fortunately, there were no substantial “blow ups” in the Repo market and the market seems to be satisfied with the outcome of the Fed’s decision. I am a little concerned at how the market will respond to less Fed induced liquidity in the system. Maybe the market takes a rest as it comes off its “high”. I pray the market does not get “withdrawals”. It will be an interesting week.
Iran was a non-event! After the United States took out an Iranian terrorist general, Iran fired missiles at our installations in Iraq and Thank God that no American lives were lost. Actually, Iran notified Iraq and Iraq told us where Iran was going to fire, so we removed our people out of harm’s way. Trump put severe economic sanctions on Iran and I believe that should be enough to deter them from procuring a nuclear weapon. I would not be surprised to see the Iranian people overthrow the current regime and put in a new government with more democracy and freedom because they deserve it.
More good news! The Senate Finance Committee approved the U.S.-Mexico-Canada Agreement on Tuesday moving the revamped North American trade deal a step closer to a final Senate vote in the coming days or weeks. U.S. jobless fell to 214,000 from 222,000 a week earlier. The China trade deal is expected to be signed this week. The appeals court allowed the use of $3.6 billion of military construction funds to continue building a border wall. Trump is delivering on his promises and the market is cheering.
Bottom line: The Fed’s took its foot off the gas pedal last week and now we wait to see how the market reacts to a reduced balance sheet. Financials (banks and brokerages) are reporting 4th quarter earnings this week. If the financials rally after earnings, I may look at some bank shorting opportunities. I believe the Fed will next cut rates and historically that has not been good for the financials as the spread narrows. Historically, banks tend to make more money when the spread between what they pay for deposits and lend out widens. Thank you for reading and I wish you the very best of profits!
LIONX is a BRI, Trend Following, Liquid-Alternative Mutual Fund that is Actively Managing Risk like a Hedge Fund seeking low-correlation/beta/risk to the stock indexes. When my Strategy identifies a low risk environment, I seek to invest in growth stocks/junk bonds with sound fundamentals and strong technical chart patterns. During high risk environments I seek to avoid Life-Changing losses. The Issachar Fund seeks moderate capital appreciation consistent with capital preservation. The Fund’s Adviser (HCM) is Celebrating 30 Years of Actively Managing Risk!
Prior to June 2019, I was not honoring God by investing in companies that support abortion, pornography, human trafficking, etc. After I learned more about implementing BRI, God changed my heart and His hand of favor continues to bless LIONX. Biblical Responsible Investing (BRI) is the term used to describe the activities of Christian investors who purposely align their investment choices to support their Christian beliefs. LIONX is ESG (Environmental Social Governance) conscious, pro-life and pro-family and will not invest in securities with a negative InspireImpact Score.
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 https://www.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, Inc is not affiliated with Northern Lights Distributors, LLC. Important Risk Information. Mutual Funds involve risks including the possible loss of principal. 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. If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. 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. If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. Quantitative easing (QE) is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject liquidity directly into the economy. NLD Review Code: 3046-NLD-1/13/2020