The Issachar Fund went to 100% Cash on Friday as Black Friday buying turned into Red Friday selling due to COVID lockdown fears! Omicron is the new COVID variant that caused Biden to impose travel bans. I believe it is an overreaction and an excuse to exert more power and socialist government control, but Americans will not freely accept more lockdowns or mask and vaccine mandates. America is home to the free and the brave! However, my opinion does not matter when the market speaks this loudly, so I follow the money and big money went on defense last week. Last week, the big-cap S&P 500 was down over 2%, while the tech-heavy Nasdaq lost over 3.5%, and the small-cap Russell 2000 tumbled around 4.5%. The junk bond market lost about 1.3% last week, indicating higher risk as investors sold riskier stocks and bought 20-year Treasury Bonds (rising over 2.5% on Friday) in a flight to safety. Gold lost about 3.3%, and the digital gold proxy, Bitcoin, lost about 6% last week. REITs lost about 3%, and crude oil fell nearly 12% on Friday! A market top is a “process,” whereas bottoms are more of an “event.” The S&P 500 Index has tried to penetrate the 4,700 level of resistance four times since November 8, so maybe we have seen the top. Either way, I plan to manage risk and take advantage of the opportunities on the short and long side of the market as I see them. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed increased its balance sheet by only $6 billion last week from a $12 billion increase the prior week, so “tapering” has begun! We may soon find out how dependent the stock market was on the Fed’s balance sheet expansion experiment. Remember, the S&P 500 Index was down over -33% in the COIVD crash last year from February 19th to March 23rd before the Fed turned on the money spigot creating over $4.5 Trillion of new money out of thin air to save the market. Well, “this time is different” because this excess money printing created lots of inflation that Americans are now experiencing. Now that Biden will reappoint Fed Chairman Jay Powell, the new focus will be on taming the very inflation Powell created. However, the Fed is trapped! If it creates more money to buy more bonds to keep interest rates low, it will likely generate more inflation, potentially hurting middle America. Inflation can be like a “hidden tax” on all consumers, but lower-income families can be the most affected. Can the Fed put the “liquidity” genie back in the bottle? The Fed has already started tapering its bond purchases, so I believe we will get a glimpse of what happens when the Fed removes the spiked punch bowl of liquidity before the lights come on. I like to dance at the party just like everyone else, but I always have my eyes on the exit waiting for someone to flick the light switch.
Bottom Line: Issachar is in Cash, waiting for the next opportunity on the long or short side of the market. Risk has been elevated, and my “line in the sand” was crossed, so I followed my time-tested discipline. My edge is my discipline. No money management style works all the time, but I believe my system will continue to avoid life-changing losses associated with bear markets and capture most bull market gains. The VIX (volatility risk measure) spiked up 54% on Friday, the 4th largest one-day percent spike in history, indicating higher risk. The S&P 500’s price-earnings ratio (PE) now stands about 2 points above where it was before the COVID Crash in 2020. In other words, the current PE risk of a steep decline is greater than before the February 2020 decline, so this decline could get uglier before it gets better. If the bull market topped last week, the market could head south fast unless the Fed starts printing again like they did to save us in the previous crash. However, printing more money will likely create more inflation, causing more unemployment and forcing more people to depend on the government. Hum? Could that be the real agenda of the Biden administration? I guess we will find out soon enough. I do not trust the government or media because everyone has a bias, but I do trust God and believe that Jesus will meet all my needs.
A Cancer Cure? Vitamin B-17! Please read G. Ed Griffin’s book “World Without Cancer.”
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: 5714-NLD-11/29/202.