The Issachar Fund (LIONX), is 100% in Cash as of 3/1/20! As previously discussed, I heeded the “red flags” and sold all positions including our muni bond ETFs. The coronavirus fears have spread faster than anticipated and fear has trumped greed. The S&P 500 Index has declined every day losing -12.70% in the last 7-days of trading and it is now down -8.27% YTD. LIONX performance results YTD can be seen here. We have just witnessed the indexes falling faster than it rises and that can be scary if one has a fully invested buy and hold posture. Past performance is now history so all that matters is how one is doing today and what one does tomorrow if things do not go as planned. I try to take it one-day-at-a-time measuring risk and positioning LIONX accordingly. My risk measure of junk bonds is trading below its 50-day moving average (dma) so my discipline has the portfolio positioned in a “risk-off” environment. LIONX seeks to avoid life-changing losses and participate in the major up trends. We could be witnessing one of those life-changing events, so caution is advised. However, I have seen this type of waterfall decline many times in the last 31 years and I am looking forward to the potential opportunities that could result after the market bottoms and the junk bond market starts trending above its 50-dma. Cash has been a good place to be while the market gets crushed but my watch list is already filled with stocks that are displaying higher relative strength so opportunity could be knocking. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The semi-conductor index bounced off its 200-dma on above-average volume last Friday! I believe that is a good sign as it shows me that “big money” could be betting that the worst is over as they pick up “fire sale” bargains. If the market can get some clarity on how the virus will impact earnings, then I believe stocks will attempt to discount the future and we will begin to see the faster horses (leaders) sprint out of the gate. However, I believe there is still too much uncertainty concerning the virus, so I plan to patiently wait for more clues from the leaders.
We just witnessed the most rapid 10% market decline off the peak in history! The Fed said it stands ready to act appropriately to address the economic fallout of COVID-19 (coronavirus). However, the Fed decreased its balance sheet by $13 Billion last week and over $24 Billion in the last two weeks so who’s side are they really on? I wonder if the Fed is allowing the market to crash so money will flow into safe-haven Treasury bonds which would allow the Fed to sell its plethora of bonds at lower rates to reduce its balance sheet? I also wonder if the “deep state” wants to crash the market in hopes of throwing us into a recession before the election lessoning Trump’s chances of re-election? It is hard for me to imagine why anyone would rather see the country fail than Trump succeed. We do live in “interesting times”. Fed futures are predicting a 100% chance of a ¼ point rate cut on March 18th and an 80% chance of another ¼ point rate cut on April 29th. I do not believe rate cuts will help the market if the virus gets out of control. The good news is that the hotter weather is believed to slow the virus spreading so the worst may be over.
Bottom line: The sky is not falling. However, risk appears elevated, and I believe risk management is now more important than ever so please be patient and do not try to catch a falling knife. My eyes are focused on tomorrow and how I want to position LIONX for the next great opportunities that are developing. It may be hard to see how we will get out of this mess but by the Grace of God we will. Thanks for reading and may your day be blessed!
LIONX is a BRI, Trend Following, Liquid-Alternative, Tactical Allocation 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! 99% of my liquid net worth is invested in LIONX, so I have the incentive to avoid life-changing losses when the next recession/bear market occurs.
Before June 2019, I was not honoring God by investing in companies that support abortion, pornography, human trafficking, etc. then God touched my heart. He revealed to me how to screen out “bad actors” and make His Fund a BRI Fund. Since partnering with Inspire, LIONX has only invested in companies with positive Inspire Impact Scores and I am very pleased with the results. Biblical Responsible Investing (BRI) describes the activities of Christian investors who purposely align their investment choices to support their Christian values. LIONX is also ESG (Environmental Social Governance) conscious, pro-life and pro-family.
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., (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. If the Fund 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. If the Fund 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. Past performance is no guarantee of future results. S&P 500 Index is an unmanaged composite of 500 large-capitalization companies. The Inspire Impact Score is a faith-based ESG (environment, social, governance) security selection methodology that seeks to identify the most inspiring, biblically aligned companies in the world. The Inspire Impact Score utilizes both positive inclusionary and negative exclusionary screens in the scoring process. The result is a rules-based system of finding companies that are operating as blessings to their customers, communities, workforce and the world and excluding companies that are operating at odds with biblical values. NLD Review Code: 3287-NLD-3/2/2020
Dexter P. Lyons, Portfolio Manager (LIONX) Sunday, March 1, 2020.