Market Update 6/9/17

The Issachar Fund (LIONX) remains fully invested and leveraged with positions in Floating Rate Bond, Unconstrained Bond, Preferred Stock, High-Yield Muni Bond and Emerging Market Bond Mutual Funds and a few ETFs in the High-Yield Muni and Preferred space as of 6/09/17 All current LIONX positions appear to be in low volatility up-trends with consistent day-to-day serial price correlations that I really like to see.  However, I stand ready to hedge, sell or trim positions in an effort to protect shareholder assets should the market take an ugly turn south.  My approach tends to be very flexible in that I can be 300% long, 150% short or anywhere in between depending on my perception of market risk.  By prospectus, LIONX can invest in any investment class of equities, commodities or currencies at my discretion.  However, I am more comfortable investing in income producing ETFs and mutual funds simply because they tend to have a better trend persistency which typically makes for a slower/smoother exit strategy when it is time to sell.  I never plan to buy and hold any asset simply because there are no guarantees and the market is constantly changing.  I use trend-line chart analysis techniques to help me identify and invest in up-trends while attempting to avoid the major down-trends.  Always remember, it is not all about what you make in the good times, it is what you get to keep in the bad times.  Bad times may be coming but they are not here yet.  (Portfolio holdings are subject to change at any time and should not be considered investment advice.  Past performance is no guarantee of future results)  

The S&P 500 Index is up 3.37% since the 1.79% drop on 5/17/17 and the up-trend looks like it may have more room to run.  The S&P 500, NASDAQ 100 and the Russel 2000 Indexes are now all flirting with records highs even as the obstructionist try to block the Trump growth agenda. The ECB decided to not raise rates at its latest meeting because the European economy is really not over-heating and a rate hike might slow down their meager economic growth.  I would not be surprised to see the Fed not raise rates at their next June meeting because the US economy does not appear to be over-heating either.  If the Fed does raise rates, then I would not be surprised to see the market use that as an excuse to head south, possibly with a vengeance.  I will continue to take it one day at-a-time and make a daily decision on how much risk I am willing to accept for the expected return I am seeking.  It is not always an easy job but I love what I do and I would not want to do anything else. 

For the first time in decades, China may raise short term rates higher than their long term rates as investment speculation in bitcoins, large city real estate, and speculative stock bubbles has the government concerned.  If the Chinese government does increase short term rates to dampen speculation then their yield curve will be inverted.  Historically, an “inverted yield curve” almost always causes a recession however the dictatorship in China has the ability to delay the recession by printing more money just like global central banks have been doing for years.  Sooner or later, there will be a price to pay for all this artificial central bank money creation experiment but for now, let’s enjoy the party.  We can all dance late at the party but when they turn on the lights you better have an exit strategy because this decline might be one that will rewrite historical decline history. 
The fruit of the Spirit is love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self-control.  Galatians 5:22    

Happiness is dictated by our circumstances while joy is a Gift so why do we work for happiness when joy is free!

 

Horizon Capital Management, Inc., RIA
Dexter P. Lyons
Issachar Fund Portfolio Manager
My Linked In Profile Page: http://bit.ly/DexterPLyonsLinkedInProfile
Member: National Association of Active Investment Manager (NAAIM) and Kingdom Advisors (KA)

Celebrating 27 Years of Managing Market Risk!
Working Hard to Earn Your Trust!
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., 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.

 

 

NASDAQ 100® Index is an unmanaged modified capitalization-weighted index composed of 100 of the largest non-financial companies listed on the NASDAQ Stock Market (“NASDAQ”). Russell 2000® Index is an unmanaged index that is a widely recognized indicator of small capitalization company performance.  It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.

Hedge: Making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.

S&P 500 Index is an unmanaged composite of 500 large capitalization companies.  This index is widely used by professional investors as a performance benchmark for large-cap stocks.

Swap Contract: agreement in which one party makes payments based on a set rate, while the other party makes payments based on the return of an equityunderlying asset, which includes both the income it generates and any capital gains.

Leverage: using borrowed money to increase the potential return of an investment

 

The indices shown are for informational purposes only and are not reflective of any investment. As it is not possible to invest in the indices, the data shown does not reflect or compare features of an actual investment, such as its objectives, costs and expenses, liquidity, safety, guarantees or insurance, fluctuation of principal or return, or tax features. Past performance is no guarantee of future results.

 

NLD Review Code:
  3422-NLD-6/9/2017

 

 
 

 

 

 

 

 

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Dexter Lyons