The Issachar Fund is 195% invested with 70% in Muni Bond Mutual Funds, 123% in Muni ETFs and 2% in stocks. My conviction level in muni bonds increased so I added to our muni exposure via Total Return Swaps. We have a Total Return Swap agreement with a bank that charges us interest to buy the ETF in their account and we make or lose what the ETF returns. I like to use leverage on muni and junk bonds whenever they are trending and when I perceive the risk/reward relationship is skewed in our favor. Muni and junk bonds historically have good day-to-day serial price correlations which basically means the price yesterday tends to be close to the price today and that typically makes for a nice trend. I also like what I am seeing in my stock Watch List as stocks are breaking out on strong volume which indicates to me that “big money” is coming back in the market. (Portfolio holdings are subject to change at any time and should not be considered investment advice. Allocations exceeding 100% result from the use of leverage.)
Trump cuts a deal with Mexico and the market rallies. Mexico agreed to stem the tide of immigrants crossing our southern border and President Trump agreed to not impose 5% tariffs. The uncertainty of Mexican tariffs had the market worried about the potential negative impact on corporate earnings, but that concern appears to have been lifted and the market is greeting the news with a warm welcome. This has been a news driven market and when the news is perceived as “good”, the algorithmic trading programs (algos) kick in “high gear” and drive prices higher and visa versa when the news is perceived as “bad”. Yes, there is a lot of emotional (fear & greed) “human” trading in the market but I believe that computers dominate most of our trading today. Humans are typically slower at reacting to fear and greed whereas algos have no emotion and can change from being bullish to bearish and visa-versa in milli-seconds. Machines do not panic; they just buy and sell based on the inputs (news) they receive. Could it be that all the “bad” news is out, and the worst-case scenarios are known? The one thing that is constant …is change. I guess we should let go of the past and embrace the “now” because we cannot have yesterday’s return. I try keep a teachable spirit to learn from my past 29-years of investment mistakes and make wiser decisions that will hopefully lead to profitable investments in the future. Managing your money is a full-time job and I try to give it my full attention.
The Jobs Report showed that only 75,000 new jobs were created vs. estimates of 185,000. It is believed that fewer jobs created will put pressure on the Fed to cut rates which is expected to boost the economy. The unemployment rate is at a 49-year low of 3.6%. Of course, this is largely due to the number of low paying temp jobs that are included in the tally. There are also a lot of people who have given up looking for a job that are not included in the tally. There are an estimated $10 Trillion dollars of negative yielding government bonds worldwide and that is hard for me to imagine. Imagine buying a government bond and having to pay them interest to buy their bond, it makes no sense to me. However, that is reality. I believe there is a lot of money seeking a positive yield and it is finding its way here in the US because our government bond yields are currently around 2%. As more and more money finds a “happy home” in US government bonds I believe the prices should continue to rise and the yields should continue to fall. I believe the Fed created an economic slowdown/stock market decline by raising rates in December and now they want to correct their mistake by lowering rates to get us back on track and get Trump reelected.
Trust in the LORD with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight. Proverbs 3:5-6
Bottom line: I believe the V-bottom straight up advance off the June 3rd low may be due for a pull back as stocks appear a bit extended. The major indexes are now trading above their 50-day moving averages and I believe that is a good sign. Money is still flowing into the muni bond space and that seems like a good place to be for now. If I am wrong, I will do what is necessary in an effort to minimize our losses and maximize our gains. I am All In!
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. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the inability to collect revenue, for the project or from the assets. Moreover, an adverse interpretation of the tax status of municipal securities may make such securities decline in value. 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. Use of leverage can magnify the effects of changes in the value of the Fund and makes them more volatile. 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. NLD Code: 3429-NLD-6/11/2019