The Issachar Fund (LIONX), is about 80% invested in Bond and Preferred ETFs. I reduced exposure last week as some of our positions seem to have run out of gas. Gold fell hard mainly due to a strong dollar. The dollar rallied mostly because the Euro and Yen dropped as their economic growth prospects dwindled further. LIONX holds international, junk, muni and corporate bond ETFs and one Preferred Stock ETF. If these remaining positions do not perform as I expect, I will act accordingly. 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.)
P/E expansion stocks are now becoming P/E contraction stocks as sellers capitulate! Momentum stocks with high Price/Earnings (P/E) ratios performed very well this year until they came under attack recently by the Algos (algorithmic computer driven trading programs). As momentum buying in the clouds and software stocks picked up steam their P/E ratios expanded rapidly and now they are contracting in relentless fast-action declines. The algos are programmed to squeeze the most out of every trade long/short and they do not operate on human emotions of fear and greed but on mathematical probabilities. I believe the algos were created out of excessive amounts of QE pouring into the “system” that has to go somewhere, right. I believe the algos are redefining the investing world as we once knew it. Stocks breaking out of sound basing patterns on strong volume used to be a profitable trading system but it appears the algos are now targeting these kinds of break-out patterns and squeezing out the “weak-hand” investors. I have been studying, reading and learning how to adapt to what I believe is a “new market algo” reality and I believe I am making a lot of progress. However, it is a moving target. The market is always changing and there are no guarantees of what worked for the last 20-years will work next year. In fact, what happen yesterday is gone and all we have is today which is why I focus on managing risk every day. I feel very confident that the next recession may create life-changing losses for the “buy and hold” investor who ignores risk and believes that the market “always comes back”. We should never forget that the market was down over 19% into December 2018 until the Fed said they would lower rates and the market blasted off. The QE induced bull market may not be over, but I believe that it is closer to the end. However, I believe there is still some gas left in the tank because the Fed could be forced to keep lowing rates to help us compete with the “negative” rates of Germany and Japan.
China has suffered the worst single month reading for industrial output since 2002! China’s producer prices also fell at the fastest rate in three years in the month of August underscoring problems of its manufacturing sector which relies on access to the U.S. market. The euro-zone manufacturing sentiment fell in September to its worst level in almost seven years suggesting potential stalling at the end of the third quarter. Germany has normally been the most reliable source of growth in the region, but manufacturing PMI fell to 41.4 in September from 43.5. The International Monetary Fund reduced its global growth outlook to 3.2% this year, the weakest since 2009. Bottom line, global economic growth is slowing, and it is likely just a matter of time before America experiences a slowdown/recession. I do not believe we are there yet, but I am keeping my eyes on the road and my hands on the wheel. No one rings a bell and says it is time to get out but there is always someone saying it is a good time to buy. I say, manage risk and never buy and hold anything.
And God is able to bless you abundantly, so that in all things at all times, having all that you need, you will abound in every good work. 2 Corinthians 9:8
Bottom line: Stocks are under pressure as the indexes flirt around support at their 50-dmas and bonds are holding on, for now. 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. The Fund is ESG (Environmental Social Governance) conscious and will not invest in securities with a negative InspireImpact Score. NLD Review Code: 3705-NLD-9/30/2019