Market Update: 10-11-21

Market in Correction!   Stuck in Stagflation!  

The Issachar Fund is in Cash, 100%!  Investor’s Business Daily (IBD) calls this environment a “Market in Correction,” allowing for selling only.  IBD has an excellent record at identifying market risk, and they believe risk is high.  I also believe risk has been elevated to a level I cannot stick my head in the sand and ignore. When the market is not rewarding me for taking risk, I look for reasons to sell and patiently wait for the next opportunity.  By Prospectus, most mutual funds must stay fully invested, so they can’t go to Cash in a bear market.  Issachar is different because it is a mutual fund managed like a hedge fund that can be long, short, or anywhere in between.  Cash is a good position while the market digests higher deficit spending, slower job growth, and rising rates. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)     

No one knows where the market is headed, but we have warning signs of potential danger!  My favorite risk indicator is the junk bond market.  When the stock market senses higher risk, I have found that the junk bond market trades below its 50-DMA on higher above-average volume, as it is now.  When investors lose their appetite for risk, they tend to sell the higher-yielding bonds and buy the safer US Treasury bonds causing yields to drop.  However,  Treasury yields have been spiking higher, telling me that bond sellers are overwhelming buyers indicating something is different this time.  Could it be that inflation is not as “transitory” as Jay Powell previously assured us?  I believe inflation is real and here to stay.  The inflation we are seeing was primarily created by the Fed expanding its balance sheet to unprecedented levels.  Higher inflation may be the new normal.  Economic growth is slow and declining, but it should be expanding now that the worst of COVID is behind us.  However, the threat of even higher rates, more irresponsible spending from Congress, and potentially even higher taxes are hurting our recovery.  I believe we are in a period of stagflation where slow economic growth and joblessness coincide with rising inflation.  Oil and gas prices have hit record highs, and I do not see them abating anytime soon, so we may have to learn to live with the Biden economy of higher prices and slow economic growth. I am constantly building my watch list of stocks to buy, but my list is getting smaller, so buyer beware.  Trying to make hay when the sun is not shinning can be a costly and challenging task.    

Bottom Line: Issachar is in Cash, patiently waiting for the next long or short opportunity.  Labor shortages, rising rates, and stagnant economic growth are in our midst, and the major indexes are trading below their 50-DMAs on above-average volumes.  There are times to be invested and other times to sit on the sidelines, such as now.  I have drawn a line in the sand and refuse to go lower, so Cash should do the job now.  This is a time for patience where stock market leaders build bases where stronger hands shake out the weaker ones.  I am focused on the leaders because they tell me about the health of the market and the patient is not healthy. I hope you have a Blessed Day!   

The fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness, and self-control.  Galatians 5:22

To honor God, Issachar is 100% committed to Biblically Responsible Investing (BRI) stocks.

Links: Fact Sheet Performance Blogs Strategy My Story Docs BRI/ESG

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, obtained by calling 1-866-787-8355 or visiting www.IssacharFund.com.  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. (HCM) is not affiliated with Northern Lights Distributors, LLC. 

Important Risk Information: Mutual Funds involve risks, including the possible loss of principal.  An investment in the Fund may not be appropriate for all investors.  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. 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 Adviser’s judgment about the attractiveness, value, and potential appreciation of particular asset classes and securities in which the Fund invests may prove incorrect and may not produce the desired results. Past performance is no guarantee of future results.  Ratings are only one form of Fund performance and should not be used as the sole consideration in making an investment decision.  Opinions expressed are subject to change and are not guaranteed and should not be considered investment advice. For more information regarding the fund, including current performance, please visit www.IssacharFund.com.   Review Code: 5578-NLD-10112021.

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Dexter Lyons