Stagflation! The Issachar Fund went to an all-cash position on 4/21/22 and remains there today! The S&P 500 index is down about -11% since going to cash, so it has been a good place to be while risk increases. I believe there is still more selling to come since I have not seen a capitulation bottom. Capitulation is when investors throw in the towel and sell at any price to ease the pain of loss. An S&P 500 drop of over -5% with a flight to safety in Treasuries on the same day might mark a bottom that could produce a tradable rally that I might be interested in. I have not seen any potential fundamental changes in inflation, nor do I expect Biden to change his restrictive energy policy, which is a major factor causing prices to rise. Could Biden want higher gas prices to force people to buy higher priced electric vehicles, making more people rely on the electric grid controlled by local governments? If so, that could be defined as evil! (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed’s balance sheet went up by $4 billion last week, and the S&P 500 dropped about -3%! Since the end of March, the Fed’s balance sheet has gone sideways, and the market has fallen over -15%. The stock and bond market has been going up since the financial crisis of 2008 mainly because the Fed has been buying bonds with money created out of thin air. I believe we are in a stagflationary environment that will push us into a recession (2 qtrs of negative GDP), and inflation will worsen before demand wanes.
Bottom Line: I am not interested in trying to catch a falling knife of declining stock prices. I am waiting for a bottom and a follow-through day (FTD). An FTD can occur four days after a bottom where the market gains at least 1% on greater volume. After an FTD, I look for stocks with accelerating earnings and sales coming out of sound base patterns to buy. My buy list is minimal, which tells me that risk is still very high, so cash is an excellent place to patiently wait for the next opportunity.
The fruit of the Spirit is love, joy, peace, patience, kindness, goodness, and faithfulness. Galatians 5:22
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., 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, 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. Review Code: 5492-NLD-05/23/2022.