The Issachar Fund (LIONX) is fully invested in Muni Bonds, International Bonds, Growth Stocks, and Gold. I added a few more growth stock positions (15%), an international bond ETF (20%) and I sold the preferred stock ETFs due to a stop loss being triggered. Munis and gold continue to act very well in this low interest rate environment especially given the prospect of even lower rates around the globe. I do not see any indication of a lower rate trend reversal at this time. While higher rates are hard to envision at this time, low rates will not last forever, so I plan to stay vigilant and act prudently seeking to capture most of the upside and avoid most of the downside. I believe that it is “different this time” and gold could continue to trend higher. Gold has been difficult to trade in the past, but I believe that gold is rising “this time” because informed investors recognize what central banks are doing to their currencies. I believe investors are very concerned with the rapid loss in purchasing power of fiat currencies like the dollar, euro and yen as central banks continue to print money out of thin air. Global central banks are doing everything in their power to keep rates low in hopes of spurring economic growth and kicking the “recession can” further down the road. Sooner or later, I believe this global “QE Infinity” experiment will end and when it does it will cause many life-changing losses ….that I plan to avoid. Until then, let’s try and enjoy the ride but “don’t close your eyes” or you might regret what you do not see. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The major indexes triggered a near-term climatic low on Wednesday, leading to a sharp rally on Thursday but dropped below their 50-day moving averages (dma) on Friday. While volatility (risk) has been elevated, I believe we will eventually head higher simply due to the “liquidity” that is still in the system. Liquidity is just the amount of money in the system (market) and that amount is being aggressively created by global central banks including our Federal Reserve. As more and more money gets “created” out of nothing, that “money” (the dollar) becomes less and less valuable because there is more of it in circulation (in everyone’s pocket). German industrial production was down 1.5% month over month and that was much worse than expected. Given this disappointing production number, the markets are now expecting a fresh round of QE from Europe which I expect to eventually spill over into the global stock and bond markets. If I were in charge of investing a fresh batch of newly printed central bank money, I would seriously favor the US over Europe due to its positive yielding bonds and conservative government policies. Where would you invest a fresh batch of newly minted fiat currency?
High yield junk bonds are still trading above the 50-dma, but the price trend is down. I use the junk bond market as gauge to tell me how much potential “risk” is in the market and right now it is telling me that risk is elevated. However, I believe the market has an upward sloping bias due to QE and the junk bond market will eventually follow the trend of the stock market, so I have positioned LIONX accordingly. If I am wrong, I will take the appropriate action to meet our objective of “seeking moderate capital appreciation consistent with capital preservation”. No one can give you yesterday’s returns so how are you positioned for tomorrow? Whom do you trust and who is looking out for your best interest?
Bottom line: All major indexes are trading below their 50-dma and I view that as a “red flag” of elevated risk in the market so I have both hands on the wheel ready to hit the brakes if necessary. I remain focused on risk management in an effort to avoid life-changing losses for you and for me. If you know of someone who might benefit from my style of risk management, please help me spread the “good news”. I really appreciate your Trust and Business! Many Blessings!
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.
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. NLD Review Code: 3617-NLD-8/12/2019