Learn More
Invest Now

Market Update: 03-20-23

By /

Manage Risk or Else!   The Issachar Fund is still 100% in Cash, as risk still seems to rise! I believe there are times to be fully invested and times to sit on the sidelines. Investing without a risk-management discipline can be like going to the casino and expecting to beat the house at their own game. One may get lucky and win a few big hands, but the “house” (market) eventually wins. After 33 years of actively managing risk, I have learned the hard way to cut losses small, or I may end up trying to dig myself out of a deeper hole. The markets don’t care if I have a gain or loss. The market is comparable to a giant casino (the house), luring me with “shiny objects” to take more of my chips. When the market is not rewarding me for taking risk, I take some chips off the table until I can sleep with what is in my hand. Sometimes it may be best to throw in the towel if my line in the sand is crossed to protect my nest egg, then wait for the sun to shine again. This may be a time to “fold ’em” and not “hold ’em.” Managing risk may allow us to stay in the game to catch those big hands that will inevitability come if we play our cards right. I do not plan to stay wrong when I am wrong because that is how to go broke. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

Wow! The Fed increased its balance sheet by almost $300 billion last week! The Fed stepped on the Quantitative Easing (QE) gas pedal by printing money out of thin air and lending it to hedge funds that buy the big indexes. From 4/13/22 to 3/14/23, the Fed has steadily decreased its balance sheet by over $600 billion in fighting inflation. However, Jay Powel wiped out 50% of the last 11 months of QE in one week! This tells me the Fed may be more concerned about preventing a banking crisis/recession than slowing the inflation it helped create. Banks make money by giving depositors a lower rate than their long-term borrowers. Banks tend to lose money when short-term rates exceed long-term rates (inverted yield curve). When investors realize that it is hard for banks to make money while the yield curve is inverted, investors tend to sell bank stocks, and selling begets more panic selling. I do not believe the selling is over, and the Fed may be trying to prevent another “run on the banks” by flooding the system with more liquidity which could lead to higher inflation. The Fed seems to be driving with one foot on the gas (creating $300 billion in one week) and one on the brake (raising rates), headed for a financial/economic cliff. I believe we desperately need new leaders in Washington with a vision to unite America before it is too late!

Gold, Bitcoin, and Technology stocks have been moving higher! As the Fed created $300 billion last week out of “thin air,” this money has to go somewhere. This newly created liquidity may have been used to bid up Gold, Bitcoin, and tech stocks. Since 3/10/23, Bitcoin has been up over 37%, and the NASDAQ 100 Tech Stock Index (QQQ) is up over 5%. However, Gold has risen over 9% since 3/8/23. Gold put in a bottom before QQQ and Bitcoin, so maybe the gold market is trying to tell us something. Gold may be taking back its historical flight to safety and inflation hedge status. I can’t see the American government adopting Bitcoin as its digital currency since it can’t be controlled/devalued as they do with the Dollar. I have no interest in owning Bitcoin or any other digital currencies. I am concerned the government may use this crisis to introduce its own digital currency and force everyone to rely on the electric grid they can control. Imagine the government rationing electricity for your electric car, turning on your home lights, or using their digital coin to buy a gun. The recent rise in tech stocks is over-bought and may be short-lived unless the Fed keeps printing “free” money or lowers rates. I want to short QQQ and go long Gold, but I need more conviction.

SVB Financial Group (SIVB) look good two-weeks ago! The rating agencies considered their debt and other obligations “safe,” and no government bureaucrats argued otherwise. But insiders had already been busy dumping $150 million of their SIVB stock for months. Three days before Silicon Valley Bank blew up, Jay Powel said there was “no evidence that they raised rates too much.” Rising rates caused huge bond portfolio losses (duration risk) on the books at SIVB, leading to a “run on the bank” as depositors transferred their money to bigger/better banks. Now we are assured by Janet Yellen that everything is “safe and sound.” Yellen and Powel told us that “inflation was transitory.” Making sound investment decisions based on lies from our government is difficult. Seek the Truth, and it will set you free!

Bottom Line: We are content in Cash while banks experience more “runs” as depositors cash out in droves! Treasury Secretary, Janet Yellen, said they would protect all deposits, not just accounts under $250k covered by FDIC insurance. Bitcoin is rallying like it did during the massive balance sheet expansion experiment during COVID. Most cyclical stocks are in downtrends, indicating a possible economic decline. The S&P 500 index trades below its 50-DMA and 200-DMA on above-average volume. Gold seems to be regaining its “inflation hedge” status. Commodities and oil are falling fast as investors anticipate reduced demand in a pending recession. The Fed lent $160 billion to banks and $153 billion to the FDIC last week. We could be headed for “stagflation,” where the economy falls, and inflation rises. Respect/manage risk or long-term financial goals suffer. The Fed meets Wednesday to decide on a 25-bps rate increase or cut. Either way, market volatility will likely increase. God help us!

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

Issachar: A Buy & Hold Alternative Actively Managed Like A Hedge Fund!

Our help is in the name of the Lord, who made heaven and earth. Psalms 124:8

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 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: 5275-NLD-03/20/2023.

 

Issachar Fund Logo light blue

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

Subscribe to Upcoming
Issachar Market Updates

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

Scroll to Top