Alternative Investing The Issachar Fund is about 50% invested primarily in aerospace, agriculture, energy, and utility stocks. My conviction level increased in the energy sector, so I added exposure to a few stocks with great fundamentals and technically strong chart patterns. Biden suspended oil and gas leases in January 2021, but a federal judge in LA just ordered lease sales to resume saying there was no “rational explanation” for canceling them. Biden was not happy, so he increased the royalty rate from 12.5% to 18.75% (50% increase) in hopes of deterring drilling. Common sense says that more drilling could lead to more supply and lower oil prices could help combat inflation, but Biden appears to be more concerned with pleasing the “green agenda” crowd. More lease sale drilling could be good for the energy sector, so it will be interesting to see how the market reacts to this new ruling to increase domestic oil production. Until we find a replacement for natural gas and coal to power the electric plants that keep our lights on, the energy sector could be a good place to invest. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
10-Year Treasury Yields ended the week at 2.82%, its highest level since December 2018. Higher rates have not been good for the higher PE stocks that populate the major indexes. However, the lower PE value stocks have benefited as money flows out of one sector into another. I am encouraged to see this rotation because it tells me that money may not be hiding in cash but finding a new home in value stocks. I would not be surprised to see the indexes retest the March 14th area of support which could mean another -5% decline. If the market continues to slide, our positions could benefit, and we have an ETF that goes up when interest rates rise. If I am wrong, I do not plan to stay wrong. I manage risk every day, deciding whether to buy, sell, or hold, to grow and preserve all shareholder assets.
The Fed increased its balance sheet by $28 billion last week to an all-time high. The Fed has indicated they plan to raise rates 50-bps next month and unwind its balance sheet by $95 billion/month. The market sees that inflation may be “over its skis” and has increased rates, causing bond prices to fall since December. Rapidly rising market rates could cause the Fed to play “catch up,” raising rates more aggressively, throwing us into a recession ahead of the November elections. That would likely not be good for the democrats. However, it could be good for America as we turn from woke fossil fuel-hating leadership to a capitalistic entrepreneurial spirit that made America great. There is always hope, so follow the Spirit in your heart, and we will be better together.
Bottom Line: I believe Issachar is positioned to benefit in a rising rate environment. Money has been flowing into the alternative cyclical lower PE stocks and out of higher PE growth stocks. Banks, clouds, and semiconductor stocks have come under heavy selling pressure, while the alternative energy and agriculture stocks seem to be under institutional accumulation. I plan to follow the money but always dance close to the door.
He is not here; he has risen! Remember how he told you, while he was still with you in Galilee: ‘The Son of Man must be delivered over to the hands of sinners, be crucified, and on the third day be raised again.’
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: 5374-NLD-04/18/2022.