The Issachar Fund (LIONX & LIOTX) is 25% invested (75% Cash) in 19 growth stocks on Sunday, February 28, 2021, with $55mil in AUM @ $12.52/shr. US Treasury 20yr bond yields have been rising since January, and the stock market seemed to be okay as it continued higher. However, last Monday through Thursday, yields spiked over 13% and spooked investors as stocks dropped. No one knows if this is a 10% correction or a pullback of something less or the start of a bear market, so I followed my discipline. I sold stocks as my stops were triggered and kept the cyclical and energy names that seem to have been attracting institutional money. It looks like there is a rotation out of last year’s winners into more economic recovery names, so we will stay predominantly in the cyclicals as long as they make us feel welcome. The good news is that money seems to be moving from one sector to another versus going to cash. If the volatility picks up, indicating a sign of distribution, we may attempt to further reduce risk and sit in cash for a while as we did in the Covid crash. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed increased its balance sheet again last week by $32 billion to an all-time high of $7.59 Trillion! US Treasury 20yr bond prices spiked 3.3% higher on Friday, which seemed to halt the stock market decline for at least one day. I suspect the Fed was in the market on Friday printing more money and buying more bonds to slow the rapid rise in yields. It seems that no one is holding the Fed accountable, so they may continue to print free money until the world has enough dollars. Europe and Japan have their printing presses in high gear also, and no one seems to care, at least for now. The market is anticipating a $1.9 trillion spending bill and its impact on the economy, and it may be telling us that higher inflation is headed our way. When the market expects inflation to rise, lower current bond yields become less attractive as future higher yields are expected. Some money will flow out of bonds into cyclical stocks that may benefit from an economic recovery as America gets back to work. Gold dropped over -2.4%, and Bitcoin dropped over -5.3% on Friday, so I do not see a flight to these perceived safe havens. Gold is down over -9% YTD, and that is puzzling since I would expect gold as a commodity to rise with anticipated higher inflation, but that has not happened. That is what I love about the market. Just when you think you have it figured out; it throws you a curve.
Bottom Line: Risk has been rising, so I reduced exposure to stay in step with the market. The short-term trend is down, and we could slide further unless the Fed steps on the gas of liquidity creation. The $1.9 trillion stimulus bill should be good for the stock market and maybe not so good for the bond market. Either way, I will take my cues from the charts and follow my discipline seeking to avoid life-changing losses. If the market heads higher, I plan to quickly get in sync with the trend. Sometimes it is easy to make money, and other times it is hard not to lose it. However, my faith is in Jesus, and I trust that God is still on the throne of Grace, working all things for our good. I pray that you would see God’s hand of blessing today.
Now faith is the assurance of things hoped for, the conviction of things not seen. Hebrews 11:1
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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 visiting https://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. For more information regarding the fund, including current performance, please visit www.IssacharFund.com. NLD Review Code: 5079-NLD-3/1/2021