This Time is Different! The Issachar Fund holds about 7% in an inverse Treasury Bond fund ETF, 3% in a Gold ETF, and 90% in a high-yielding short-term fixed-income ETF! I added to our inverse bond ETF because we were being rewarded, and I believe yields may continue trending higher. Gold is in a tradable uptrend as investors seek shelter in a storm of wars, so I put my toe in the water. If gold continues to shine and yields rise, I plan to get more exposure in that space. I don’t like why gold and yields are rising, but I see an opportunity to make money if trends continue. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The S&P 500 Index is trading below its 200-day moving average on above-average volume, sitting on a significant line of support, indicating high risk/low reward! The NASDAQ 100 Tech Index has dropped below its 50-day moving average on greater volume to a level of support, so I expect an oversold bounce in the indexes. If the indexes do not hold support, they could bring the market down further. There is no good fundamental reason for the market to bottom, but I will take my cues from the charts because “price” is always right.
In every major decline, the Fed has bailed the market by printing money (increasing our national debt), but “this time is different.” When the Fed floods the market with new money created out of “thin air,” most of it gets used to bid up stock prices. The market has recovered from every crisis/crash because more money has chased fewer stocks. The more dollars the Fed prints, the less purchasing power it brings. The Fed has been raising short-term Fed Fund rates to fight the inflation they created while selling bonds off their “thin air balance sheet,” causing longer-term rates to rise. If we have another “crisis,” the Fed will likely lower rates and print more money to “save” us, but it will be different this time. Printing more money chasing too few goods will produce more inflation that only a deep recession or depression could fix. We are not there yet, but we have already jumped off the cliff, and it is just a matter of time before we hit bottom. The good news is I expect to make money on the short side (betting prices decline). Will you join me?
The Fed sold another $19 billion of bonds last week, all in the name of fighting inflation! The truth is that more bond selling causes rates to rise, which elevates inflation. A basic understanding of economics might conclude this “crazy cycle” will likely create life-changing losses for investors who have not learned how to manage risk. Managing risk means cutting losses small to prevent major losses. Last month, the Chinese sold the largest chunk of US Treasury debt in the previous four years, putting pressure on higher yields. Are the Chinese preparing for World War III or another global financial crisis similar to the crash in 2008?
All eyes on the dollar! The dollar is trading near an all-time high, so stiff resistance ahead must be overcome to maintain its World’s Reserve Status. Once the dollar starts falling, Treasury yields could rise faster as global central banks will need fewer dollars held in reserve to trade with. Foreign central banks convert their currencies into dollars, buy our Treasuries, and sell them to meet trade settlements. However, China, Russia, and Iran have begun trading oil in other currencies besides the US dollar. Our biggest dollar buyers have become sellers, forcing yields higher, and I do not see that trend changing anytime soon. Treasury yields declined over 30 years, and stock indexes always recovered from losses. However, yields are rising, so it is “different this time.”
Bottom line: Stocks and bonds are trending lower, so shorting may be the best way to make money in this environment. Our national debt and budget deficits keep expanding, and every penny of interest we pay on debt must be borrowed. All additional borrowing must be financed at higher rates, which eventually could lead to default. Even if we default, God is still in control, and I believe he is working all things for our good. Grace & Peace!
God causes everything to work together for the good of those who love God. Romans 8:28
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 IssacharFund.com. The Prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., a member of 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 an investment decision. Opinions expressed are subject to change, not guaranteed, and should not be considered investment advice. There is no assurance these opinions or forecasts will come to pass, and past performance is no assurance of future results. For more information regarding the Fund, including current performance, please visit IssacharFund.com. NLD Code: 3474-NLD-10/23/2023
Dexter Lyons, Portfolio Manager
Issachar Fund (LIONX & LIOTX)
337-983-0676 Dexter@IssacharFund.com
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