The Issachar Fund is fully invested in Muni Bonds with a small allocation in Preferreds. I continue to see money flowing into the muni bond space as investors seeking yield find a place to rest. Munis have been trending higher at a low double-digit annualized yield since the beginning of November with low drawdowns. I have my eyes on a few stocks that I would like to buy if they set up properly. The preferred stock area also looks attractive and I plan to add to our positions if they act like I expect. We are near all-time highs in the market indexes so this could be an inflection week where we break out or break down. I will keep my ears to the ground and my eyes on the road. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
The Fed announced no change to its target range for the Fed funds rate of 2.25%-2.50% and gives a green light to the market. They said “economic activity continues to rise at a moderate rate” which means what? The futures chimed in and they expect the Fed to reduce rates 3 times over the next 5 meetings. I believe if the Fed does not give the market what it expects then there could be a serious decline in the stock market but not so much in the muni-bond market. The stock market has benefited from global quantitative easing (QE) and lower interest rates since the near financial collapse in 2008 and I believe the market may not be happy if the Fed removes the punch bowl from the party too soon. As they say, “don’t fight the Fed (s)” because they have the power to create the money to QE infinity if they wish. Keep in mind, just because the stock market has always bounced back after steep declines does not guarantee that it always will which is why I never advocate a buy and hold approach. I prefer an opportunistic approach that assess market risk every day making decisions whether to be invested or not and what to be invested in if the perceived risk is low. I believe the muni bond market may be less effected if the Fed does not cut rates in July mainly because munis have historically been viewed as a lower risk, lower volatility investment. I would expect money to flow out of stocks into bonds in a steep decline panic-type event if we were to get one soon.
Gold is at a five-year high and Bit Coin is moving higher even faster. Friday was a “quadruple witching” day where index futures, stock index options, stock options and single stock futures expire simultaneously. This typically creates a lot of action and volumes can get distorted so keep that in mind when looking at charts from Friday. However, the price of gold is up about 10% since May 2 and it looks like this rally may be for real. It could be “different this time”. I believe that gold is attracting a lot of capital because investors see the massive amounts of free money that central banks are creating out of thin air and investors are concerned about the value of currencies like the yen, euro and the dollar just to name a few. The more currency a country puts in circulation, presumably the less value it will have so we should all be concerned with how much money our central bank is producing. One day, I believe there will be a price to pay for this massive QE experiment but hopefully it will not be too soon. In the meantime, I will do my best to keep managing risk in an effort to avoid life-changing losses.
Trust in the LORD with all your heart and lean not on your own understanding; in all your ways submit to him, and he will make your paths straight. Proverbs 3:5-6
Bottom line: I believe we are at an inflection point in the market where we either break out to new highs or we break down to test the lows. We could tread water sideways, but I do not put a high probability on that sideways action bet because I believe gold and the alternative currencies are trying to tell us something. I plan to let the charts tell me where we are headed and what I should do. In the end, price and volume tell the truth every time and “the price is always right”. Grace & Peace to Everyone!
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, Inc is not affiliated with Northern Lights Distributors, LLC.
Important Risk Information Mutual Funds involve risks including the possible loss of principal.
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. 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. 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 to be incorrect and may not produce the desired results. Past performance is no guarantee of future results. NLD Review Code: 3450-NLD-6/25/2019