The Issachar Fund (LIONX), is still in Cash as of 3/8/20, but I see incredible opportunity in the making! While it was hard to see what could go wrong when LIONX was last fully invested on February 19, I believe one must always be ready to sell positions if risk rises and one’s “line in the sand” is crossed. I am an optimist at heart and expect the best to happen, but I have a threshold of pain where I will abandon my “system”. I will do all I can to prevent life changing options. Yes, markets have always come back from steep declines but what if next time it takes longer than ever? What will happen if the Fed runs out of “bullets” to rescue the market? Just ask the people in Japan who have been in a recession for over 30 years if zero percent interest rates have been a good policy. I expect the coronavirus to slowly burn itself out as warmer temperatures approach, but it appears that hopes for a vaccine may still about a year away. As analysts begin to understand the virus’s impact on earnings, I believe they will revise earnings estimates and then the market might be able to put in a defining bottom where new leaders will emerge. I am eager for this incredible opportunity and my watch list is full of stocks with sound fundamentals of three consecutive quarterly earnings and sales increases. However, the technical chart patterns are not displaying institutional accumulation, so I will patiently wait for the “right pitch before taking a swing”. I stand ready to start buying but my risk measures are still in the “red zone” as junk bonds are well below their averages indicating higher risk. It’s likely fear will eventually recede, and greed will take over once again, but it does not appear to be today. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The S&P 500 Index is down over 7.5% YTD (now at breakeven levels since 7/12/19) as it falls below its 200-day moving average and flirts with the low reached on 2/28/20. We had a nice constructive high-volume supportive rally off the 2/28/20 low on Friday, but the futures are down about 5% as I write this on Sunday night. We could see some capitulation selling on Monday that could set the stage for a bottom formation, but it will likely be a messy and volatile one. Could the fragile global recovery be “derailed” by the corona black swan? Global central banks are cutting rates and inflating their balance sheets trying to mitigate the negative effects of the coronavirus, but will it help? Market crashes are not fun and can be kind of scary at times so we should always be prepared to act in case of an unexpected black swan event. Historically, there have been enormous opportunities on the other side of a black swan event if one is patient and able to buy when the “price is right”.
The Fed surprised us with a ½ percent emergency rate cut last Tuesday and the market has declined about 5% since then! Did they panic or do they see something we are not seeing as they slowly run out of ammunition? The yield curve is still inverted putting pressure on the banking system, so I believe the Fed will likely cut rates again this week. The Fed also increased its balance sheet by $83 billion last week and that is the second-largest weekly increase since they started their balance sheet expansion experiment on 8/30/19. 10-year Treasury yields hit all-time lows near 0.70% last Friday. However, the 10-year Treasury yield in the futures market is currently trading at 0.50% which is a 25% + drop in yield since Friday! The 20+ Year Treasury bond price finished up 5.2% on Friday! Commodity indexes have fallen about 11% YTD. Oil prices dropped 10% on Friday and are down about -32% YTD. Oil futures are down about 30% from Friday! Gold futures are up only about 1%, so I am not seeing a flight to safety in the precious metals. 30-year Treasury bonds seem to be the safe-haven play tonight as they rally up near a 4% gain in price from Friday’s close. Saudi Arabia promises to open the spigots (creating a price war) hoping to drive oil prices down as Russia/OPEC relations turn ugly. The dollar has dropped almost 4% since 2/20/20 in a waterfall decline!
The entire city of Milan is being quarantined! Since one can remain asymptomatic for at least a couple of weeks, quarantines have done little to contain the virus. Severe quarantines and supply chain disruptions could cost many jobs and health concerns. The number one silent epidemic killer is called stress. Never let anyone or anything steal your Peace.
Bottom line: Things could get worse before they get better. Fear should eventually decline, and greed will likely return. I believe Cash is good place to be until the next opportunity presents itself. Catching a falling knife could be dangerous, so I plan to be patient and let the chips fall where they may then the bargain hunting can begin. I pray that you find His Grace and Peace in this storm of life.
And the peace of God, which surpasses all understanding, will guard your hearts and your minds in Christ Jesus. Philippians 4:7
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.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., (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. If the Fund uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. The Adviser’s judgment about the attractiveness, value and potential appreciation of particular asset classes and securities in which the Fund invests may prove to be incorrect and may not produce the desired results. If the Fund uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. Past performance is no guarantee of future results. S&P 500 Index is an unmanaged composite of 500 large-capitalization companies. Biblical Responsible Investing (BRI) describes the activities of Christian investors who purposely align their investment choices to support their Christian values. LIONX is also ESG (Environmental Social Governance) conscious, pro-life and pro-family. LIONX is a BRI, Trend Following, Liquid-Alternative, Tactical Allocation Mutual Fund that is Actively Managing Risk like a Hedge Fund seeking low-correlation/beta/risk to the stock indexes. When my Strategy identifies a low-risk environment, I seek to invest in growth stocks/junk bonds with sound fundamentals and strong technical chart patterns. During high-risk environments, I seek to avoid Life-Changing losses. The Issachar Fund seeks moderate capital appreciation consistent with capital preservation. The Fund’s Adviser (HCM) is Celebrating 30 Years of Actively Managing Risk! 99% of my liquid net worth is invested in LIONX, so I have the incentive to avoid life-changing losses when the next recession/bear market occurs. Before June 2019, I was not honoring God by investing in companies that support abortion, pornography, human trafficking, etc. then God touched my heart. He revealed to me how to screen out “bad actors” and make His Fund a BRI Fund. Since partnering with Inspire, LIONX has only invested in companies with positive Inspire Impact Scores and I am very pleased with the results. The Inspire Impact Score is a faith based ESG (environment, social, governance) security selection methodology that seeks to identify the most inspiring, biblically aligned companies in the world. NLD Review Code: 3326-NLD-3/9/2020