The Issachar Fund (LIONX), is fully invested in Bond and Preferred ETFs and a Gold Mutual Fund. The yield on the 10-year Treasury Bond peaked on 9/13/19 as it bumped up against its down trending line of resistance and has traded lower since. This down trend in yields started in November 2018 which was right around the time the stock market started to decline so I believe this line of resistance is significant. My conviction level in the bond market has gone up substantially and bonds are our largest weighting. Muni bonds make up the biggest percentage of our bond holdings while international bonds come in second. Preferred stocks have been trending up nicely with low volatility, and I am very attracted to this kind of chart pattern. However, I am a little concerned that short sellers may come after this segment of the market since they have already hit most of the areas that were doing well this year. Gold has perked back up last week in price on good volume and we may see gold resume its uptrend if stocks come under selling pressure. I am prepared to sell any and all positions if things do not go as planned. There are no guarantees in the stock market, and no one knows what tomorrow brings so I focus on today. My approach is to assess the risk in the market every day and take prudent action to keep shareholders in line with our objective of “seeking moderate capital appreciation consistent with capital preservation”. LIONX is a BRI, Alternative, Risk-Managed, Trend-Following Mutual Fund managed like a Hedge Fund seeking low-correlation to the stock indexes. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The Fed lowered rates ¼ point last week and it seems the market wanted a ½ point cut instead. The indexes did not penetrate the all-time highs, but they are trading above their 50-dmas of support. A Chinese delegation cancelled its meeting with our farmers in Montana and Iranian tensions escalated last week due to a Saudi Arabian oil facility attack weighed heavy on stock prices. The hope of favorable Chinese talks “band-aid” that was holding the market up may be “coming off”. Stock indexes look okay but if I look “under the hood” I see a different picture. I am finding more broken chart patterns among this year’s leaders and less stocks that are “setting up” to be purchased. In fact, I am finding more stocks that are setting up as “short” sale candidates than I am finding stocks setting up buy candidates. Shorting stocks in a bull market can be dangerous so I am just “watching” for now. I believe this market is more suited for nimble day-traders who can be in and out quickly based on very short-term trends and/or “hot” news. I am seeing a bit of rotation out of stocks into bonds and I am comfortable with the way we are positioned.
I recently attended the annual National Association of Christian Financial Consultants (NACFC) Conference where I met some of the people who started the BRI Movement over 20 years ago. I believe the Biblically Responsible Investing (BRI) movement will continue to grow as more investors become aware of what their money is invested in. LIONX does not invest in companies which it believes goes against biblical principles like abortion and pornography. I am proud to have joined this BRI “trend” and I am expecting great results going forward. I was interviewed by Aric Johnson of “The Real FBI” while at the Conference and you can hear the pod cast by clicking this link: FBI Link. I always welcome your feedback.
The European Central Bank (ECB) cut rates by 1/10 of a point from -0.4% to -0.5% (negative rates) and announced they will restart QE with $20 billion/month. European stocks declined! I believe Europe’s economy and stock market is headed lower unless they cut taxes and regulation like Trump did here in America. Europe’s open borders and growing socialistic bigger government spending mind sets could likely cause Europe to slip deeper into recession. There have been more than 730 global interest rate cuts since the financial crisis in 2008 and little evidence that lower rates are producing stronger economies. The ECB is trying to force its banks to lend more of its reserves by “punishing” them with more negative rates. The more European banks hold European government bonds in their bank reserves, the more it cost them. Higher negative rates do not seem to be achieving to desired outcome of producing economic growth. Japan is in the same “boat” as Europe with negative rates and a sluggish (at best) economy. Japan reported that orders to machine tool makers fell by 37% on the year which is the lowest since 2009. If QE worked, the ECB would not need more negative rates, but QE has not worked! If more QE and more negative rates are not producing growth in Europe and Japan, do you think it will be any different here in America? U.S. stock earnings are heavily inflated due to corporate buybacks which is at all-time highs, now totaling $5.4 trillion. I believe we will see currency wars next as countries devalue their currencies to boost their exports. Currency war extremes could likely usher in a global digital currency like Bitcoin! Regardless, I believe the Fed will lower rates at its October meeting and it will be good for bonds, but I am not so sure about stocks. Therefore, I believe bonds offer a better risk-adjusted return than stocks at this time. As always, I am dancing with my eyes on the exit!
This righteousness is given through faith in Jesus Christ to all who believe. There is no difference between Jew and Gentile, for all have sinned and fall short of the glory of God, and All are Justified freely by his Grace through the Redemption that came by Christ Jesus. Romans 3:22-24 (Just Believe and Rest in His Grace!)
Bottom line: Bonds look like they are poised to trend higher while stocks may need more time to consolidate. Preferreds offer a mixture of stock and bond appreciation. Gold may resume its up trend. I can not make a case for higher sustained rates therefore I like bonds more than stocks, today. Thanks for Your Trust and Business and May God’s Grace & Peace Overwhelm You!
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. 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. NLD Review Code: 3694-NLD-9/23/2019