Alternative Investing! The Issachar Fund is about 35% invested primarily in agriculture, energy, and utility stocks! The market is trying to position itself ahead of higher inflation, slower growth, and a less accommodative Fed, so they came after the chips, transportation, and higher P/E growth stocks last week. The junk bond market rolled over in January, indicating that the market may have lost its risk appetite and has been struggling since. When the market is not rewarding risk-takers, I look at alternative investments or cyclicals that are more defensive. We seem to be positioned well in this stagflationary environment, but a “ceasefire” in Ukraine could change the dynamics of how we are positioned. Money must go somewhere, and it seems to be flowing out of bonds and riskier stocks into the more “value” (lower P/E) stocks. The money does not appear to be hiding out in cash, which gives me conviction for holding the stocks we own. However, our stocks ran up on Friday, so I would not be surprised to see some profit-taking. Our stocks appear to be in fundamentally and technically strong positions under institutional accumulation. I will continue to do my best to monitor risk daily and adjust the portfolio accordingly, seeking to avoid life-changing losses. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed’s balance sheet was flat last week! Since the Fed minutes were delivered on Apr 6, the CME Fed Fund Futures is now pricing in 9 more 25 bps rate hikes this year with a 77% chance of a 50-bps hike at their next meeting in May. The Fed indicated it plans to run off $60 billion in Treasurys and $35 billion in mortgage-backed securities each month, above estimates of $70-90 billion. This tells me the Fed may be focused on reducing the “transitory” inflation they created by printing money out of nothing. Market interest rates have been rising at an unsustainable pace as bonds come under selling pressure, believing the Fed will do what it says to get inflation under control. If the Fed raises rates and unwinds its balance sheet too fast, it could throw us into a “hard landing” recession and a severe bear market. This is not a time to throw caution to the wind.
Bottom Line: We are positioned in stocks that seem to be in favor. If that changes, I will not hesitate to hedge or sell to preserve and grow shareholder assets.
Do not be anxious about anything, but in every situation, by prayer and petition, with thanksgiving, present your requests to God. Philippians 4:6
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: 5327-NLD-04/11/2022.