Market Update: 09-18-17

The Issachar Fund (LIONX) is fully invested and leveraged in: Strategic Income, and High Yield Muni Bond mutual funds and ETFs as of 9/14/17.   I have not made any significant changed to the portfolio in the last two weeks.  I do not believe that tax free income derived from muni bonds is in jeopardy of being repealed in the Trump tax reform negotiations.  However, I stand ready to take action and attempt to manage risk and limit losses.  (Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)

The stock market up-trend that started on 2/11/16 is still in-tack and the market is trading near all-time-highs.  The energy sector has rallied nicely off the 8/21/17 low but it is right up against stiff over-head resistance so it will be interesting to see how it responds.  The dollar is still trending lower since the high on 1/3/17 which indicates to me that the market does not expect the Fed to raise rates in the near future.  A steady dollar decline does conjure up the possibility of impending deflation.  I am watching energy and the dollar for signs of a change in market character but so far, so good.  I do not expect the Fed to raise rates in December as Texas and Florida recovers from wrath of Harvey and Erma.  Rising interest rates typically are not good for bond holders so needless to say, I keep a close eye on rates.

According to the founder of The Weather Channel, John Coleman who is a scientist, the government gives about $2.5billion per year to scientists who will support the Global Warming Hypothesis of the Democratic Party.  Maybe that is why 97% of the scientific reports support global warning.  John said in a CNN interview that 31,000 scientists signed a petition agreeing with him stating that there is no significant evidence that man-made global warning exist today or in the past.  Science is about facts and it is not about a consensus.  Do you think that the scientists receiving the research money might have a conflict of interest to produce the results desired of the people giving them the money?

While Trump tries to “Drain the Swamp”, the Shadow Government and the Deep State (powerful secret groups “pulling the strings” behind the scenes) will certainly put up a fight.  I believe these secret groups have been controlling the country since 1962 and they will do everything they can to discredit Trump.  John F. Kennedy understood the power of these secret forces and wanted to end them.  He fired the CIA Director for not informing him of a covert operation and later John F. Kennedy was assassinated.  Term Limits in Congress might get rid of career politicians who are working for big money rather than for the people who elected them.  If you want to read more on this, do a Search on Kevin Shipp.  The Truth is sometimes hard to Believe.

The AAII (individual investors) survey revealed that cash in investor’s portfolios is now at a 17.5 year low.  It seems that individual investors are all-in.  Mutual fund investors have the highest ratio of stocks vs. money market funds in history.  It is higher than it was near the market tops in 2000 and 2007.  This was interesting: in the bear market of 1973-75, the Value Line index lost about 80% of its value while S&P 500 stocks had rising quarterly earnings each quarter.  Studying stock market history could save you a fortune.  That is why I never subscribed to the buy and hold philosophy.  I believe that the brain is the best tool we can use to manage risk and limit losses.

According to a Fox News Report by William La Jeunesse: North Dakota is now #2 behind Texas in oil production.  We used to get 70% of our oil from OPEC and now it is only 34%.  Ten years ago we produced only 5 million barrels per day (BPD) and now we have nearly doubled that to 9.6 million and sometime next year we could overtake Saudi Arabia as the #2 producer. In 2005 we imported 12 million BPD of oil and now we are exporting 7 million BPD.  15 years ago we imported 80% of our natural gas and now we are the world’s largest producer.  We are exporting our natural gas by pipeline to Canada and Mexico and via tankers to Europe.  The US has been the world’s largest producer of petroleum and natural gas for the last five years. OPEC thought that they could put the Shale producers out of business by oversupplying the market and driving down the prices but the shale producers are actually making money at $55/barrel which they thought was impossible.  It is so interesting how the free-market run by hard-working entrepreneurs figure out how to do things better and more efficiently than big governments.

Be kind and compassionate to one another, forgiving each other, just as in Christ God forgave you. Ephesians 4:32

Please click here if you would like to see my 2nd Quarter LIONX Fact Sheet.

 

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Disclosures below:

There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Investors should carefully consider the investment objectives, risks, charges and expenses of the Issachar Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-866-787-8355 or visiting 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., National Association of Active Investment Managers, and Kingdom Advisors is not affiliated with Northern Lights Distributors, LLC.

Mutual Funds involve risks including the possible loss of principal.

The Fund may engage in frequent trading, leading to increased portfolio turnover, higher transaction costs, and the possibility of increased net capital gains, including net short-term capital gains that will be taxable to shareholders as ordinary income when distributed. The Fund may hold cash positions and 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. The Fund’s investments in large capitalization stocks may underperform Funds that invest primarily in the stocks of lower quality, smaller capitalization companies during periods when the stocks of such companies are in favor. Investments in small-capitalization and mid-capitalization companies involve greater risks and volatility than investing in larger capitalization companies. Small and medium-size companies often have narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies. The Fund is non-diversified, which means it invests a high percentage of its assets in a limited number of securities. A non-diversified fund’s NAVs and total returns may fluctuate more or fall greater in times of weaker markets than a diversified mutual fund.

The Fund invests in debt instruments which have varying levels of sensitivity to changes in interest rates, credit risk and other factors. Many debt instruments are subject to prepayment risk, which is the risk that the issuer of the security will repay principal prior to the maturity date. The Fund could lose money if the issuer or guarantor of a debt security goes bankrupt or is unable or unwilling to make interest payments and/or repay principal. Changes in an issuer’s financial strength or credit rating also may affect a security’s value and have an impact on Fund performance. The value of the Fund’s investment in fixed income securities will fall when interest rates rise and the effect of increased interest rates is more pronounced for intermediate-term or longer-term fixed income obligations owned by the Fund. The Fund will invest a significant portion of its assets in securities that are rated below investment grade or “junk bonds.” Junk bonds may be sensitive to economic changes, political changes, or adverse developments specific to a company. These securities generally involve greater risk of default or price changes than other types of fixed-income securities and the Fund’s performance may vary significantly as a result. The floating rate loans in which the Fund invests are usually rated below investment grade and are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities and may be less liquid than higher rated debt securities.

The value of the Fund’s asset-backed securities may be affected by changes in interest rates, the availability of information concerning the interests in and structure of the pools of purchase contracts, financing leases or sales agreements that are represented by these securities, the credit worthiness of the servicing agent for the pool, the originator of the loans or receivables, or the entities that provide any supporting letters of credit, surety bonds, or other credit enhancements. The Fund’s investment in municipal securities carries additional risk including changes in federal, state or local laws that may make a municipal issuer unable to make interest payments when due. 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. In addition to the risks typically associated with fixed income securities, loan participations carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loan participations may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market.

The Fund uses investment techniques, including investments in futures contracts, forward contracts, options and swaps, which may be considered to be an aggressive investment technique. Investments in such derivatives may general be subject to market risks that may cause their prices to fluctuate over time and may increase the volatility of the Fund. The use of derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities underlying those derivatives, such as counter party risk and the risk that the derivatives may become illiquid. The use of derivatives may result in larger losses or smaller gains than investing in the underlying securities directly. Interest rate swaps are subject to interest rate and credit risk. Total return swaps are subject to counter party risk, which relate to credit risk of the counter party and liquidity risk of the swaps themselves. There may be an imperfect correlation between the prices of options, futures, and/or forward contract and movements in the price of the securities (or indices) hedged or used for cover which may cause a given hedge not to achieve its objective. There may not be a liquid secondary market for futures contracts and Forward currency transactions include the risks associated with fluctuations in currency. If the Fund uses a hedging instrument at the wrong time or judges the market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. Use of leverage can magnify the effects of changes in the value of the Fund and makes them more volatile and increases the risk for loss in adverse environments. Short positions are designed to profit from a decline in the price of particular securities, baskets of securities or indices. The Fund will lose value if the instrument’s price rises – a result that is the opposite from traditional mutual funds.

Investments in foreign securities and securities that provide exposure to foreign securities involve greater risks than investing in domestic securities. As a result, the Fund’s returns and NAVs may be affected to a large degree by fluctuations in currency exchange rates, political, diplomatic or economic conditions and regulatory requirements in other countries. The Fund also may invest in depositary receipts, including ADRs, which are traded on exchanges and provide an alternative to investing directly in foreign securities. Investments in ADRs are subject to many of the risks associated with investing directly in foreign securities. The laws and accounting, auditing, and financial reporting standards in foreign countries typically are not as strict as they are in the U.S., and there may be less public information available about foreign companies. Investments in emerging markets instruments involve greater risks than investing in foreign instruments in general. Risks of investing in emerging market countries include political or social upheaval, nationalization of businesses, restrictions on foreign ownership and prohibitions on the repatriation of assets and risks from an economy’s dependence on revenues from particular commodities or industries among others. No-Load mutual funds are sold without a sales charge, however other fees and expenses do apply to an investment in the Fund.

NLD Review Code: 3657-NLD-9/18/2017

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Dexter P. Lyons

Dexter P. Lyons is a Christian Money Manager seeking to honor God in his profession as a Portfolio Manager of a No-Load Mutual Fund.