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Market Update: 02-07-22

By / February 7, 2022

The Issachar Fund is still 100% in Cash! All the major indexes are trading below their 50-day moving averages, indicating a higher risk environment. The junk bond market tells us that investors may have lost their risk appetite. The 30-year Fed Rate mortgage went from 3.11% to 3.55% this year! That equates to a 14% increase in a 30-year mortgage which could seriously put a damper on new home purchases. Oil prices are up over 16% this year alone, so inflation could be one of the many reasons the NASDAQ is down about 10% in 2022. The 2-yr Treasury yield is now higher than five years ago, so the bond market is trying to tell us something. The Fed told us they plan to raise rates and slow their bond purchases to fight inflation, but their actions are yet to be seen. Imagine what may happen to the stock market if the Fed taps the brakes on rates and money creation. We could have another leg down, which may be why the market is struggling to catch a bid these days. A few sectors like Energy, Transportation, and Agriculture appear to be under accumulation, and I am looking to make some buys but still no conviction. Sometimes the hardest thing to do is nothing, and that takes discipline. Honestly, I would rather miss an opportunity than potentially lose money, so we will stay in Cash until the charts say otherwise. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

The Fed’s balance sheet INCREASED by $13 billion last week to an all-time high of almost 9 TRILLION! God help us if/when the Fed raises rates and reduces their balance sheet. I would not be surprised to see the Fed walk back its hawkish stance on rates and keep creating money out of nothing to appease the stock market. If the Fed raises rates, bonds will likely decline further, and the cost of servicing $30 trillion of debt will undoubtedly increase. If our interest payments on the $30 trillion of debt rise, then congress will most likely increase the budget, allowing them to raise our taxes even more. I believe the Fed is stuck between a rock and a hard place they created. It will be interesting to watch what happens in March when they allegedly raise rates to fight “transitory” inflation. I do not see a happy ending for the stock or bond market if they do what they say. I take it one day at a time, studying the price and volume charts of leading stocks. The charts never lie, and when big money decides it is time to head higher, we will see their footprints in the sand. Big money price advances on above-average volume tell us where the market is heading, and right now, it is uncertain, so we patiently wait for more clues.

Bottom Line: I believe this is a tradable market, not an investable one, so we will wait for the stock charts to tell us when to invest. Interest rates are rising, indicating inflation may not be “transitory,” and the stock market is adjusting stock prices accordingly. The oil market is attracting a lot of money, but it appears extended, or is it just getting started. There is no alternative that can replace oil that I am aware of, so $150/barrel is not beyond the realm of possibility. God is sovereign and will never stop loving us, which gives me rest and peace. May God’s Grace & Peace Bless You Today!  

May the God of hope fill you with all joy and peace as you trust in him, so that you may overflow with hope by the power of the Holy Spirit. Romans 15:13

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

Issachar: An Alternative Mutual Fund Managed Like A Hedge Fund!

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: 5213-NLD-02/07/2022.

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Issachar Fund
c/o Gemini Fund Services, LLC
17605 Wright Street, Suite 2
Omaha, NE 68130
866‐787‐8355
337‐983‐0676

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Important Risk Information

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, which can be obtained by calling 1-866-787-8355 or going to the Documents page.  The prospectus should be read carefully before investing. The Issachar Fund is distributed by Northern Lights Distributors, LLC., member FINRA/SIPC

The Issachar Fund involves risks including the possible loss of principal, and may not be suitable for all investors.

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 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 creditworthiness 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 counterparty 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 counterparty risk, which relate to credit risk of the counterparty 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.

No-Load mutual funds are sold without a sales charge, however other fees and expenses do apply to an investment in the Fund.

Total annual fund operating expenses are 1.86% for Class N and 1.74% for Class I. Total annual fund operating expenses after fee waiver and expense reimbursement are 1.90% for Class N and 1.65% for Class I. The Fund’s adviser has contractually agreed to waive management fees and make payments to limit Fund expenses until February 1, 2023 so that total annual operating expenses do not exceed 1.90% for Class N and 1.65% for Class.

NLD Review Code: 5119-NLD-3/16/2021

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