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Market Update: 08-29-22

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Powell Plummet!   The Issachar Fund is about 67% invested and concerned! Junk bonds are trading below their 50-day moving average, indicating investors have lost their risk appetite and the market may be headed lower. I added a small junk bond short ETF as a hedge against further stock declines. Issachar owns stocks in the oil, gas, coal, solar, chemicals, and fertilizer space which have been holding up relatively well. However, I follow the charts, do not buy and hold anything, and always have an exit strategy. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

We could be in the third and final bear market wave lower to test the June 16th bottom, which is another 11% lower! I make daily decisions managing risk, and the market determines the return. Jay Powell (Fed Chair) said, “there will be a pain to households and businesses as they fight inflation.” Ouch! Powell spooked the market with more words like “forcefully” and “until the job is done” on Friday, and major index ETFs dropped over -3% on above-average volume. This drop could be a simple “shake-out bull-trap” designed to scare investors out of their positions or a new leg lower. If the market were worried about Powell raising rates higher than the 75bps that may already be priced in, the bond market would have tanked, but it didn’t. Instead, 20-yr Treasury bond prices went up ¾% on Friday, indicating a more ominous flight to safety. No one knows. I believe the Fed could raise rates 75bps at their next meeting in September and do nothing before the November elections to not appear political. However, it seems people of power may influence the Fed in office, and he may do their bidding to keep his job.

The Fed increased its balance sheet by $2 billion last week! I expected the balance sheet to shrink faster, like the prior week. The Fed indicated they would decrease their balance sheet by $60 billion/month starting in September. This could be bad for stocks and bonds if they do what they say. Maybe they are trying to achieve a “soft landing” and not crash the economy and stock market ahead of a major election in November. The market is always looking ahead, and when new data from the Fed appears, the market adjusts accordingly. Higher rates hurt higher growth stocks with higher debt, so they typically get hit the hardest, like on Friday.

Tidbits: We depend on hydrocarbons for 84% of all energy, which is only 2% lower than 20 years ago. Wind and solar technologies supply about 5% of global energy. Electric vehicles offset less than 0.5% of world oil demand. Is the “climate change” scare another hoax like “Russia Collusion?” Electricity in Europe has risen about 800%, which is unaffordable. Natural gas in Europe is priced at 580% the price of oil, up from 400% a few weeks ago. What will happen to natural gas prices when winter hits? Europe could be flirting with a deep depression, while the US could be stuck in stagflation battling with negative GDP growth and high inflation. The S&P 500 index has been up less than 1% since 4/9/21. Please financially support and vote for people of integrity in November who do what is right in God’s eyes, not what is popular.

Bottom Line: Issachar is invested, but that could change if the market continues its high-volume sell-off from Friday. Since the Fed started lowering rates and printing “fake money” to save us from the 2008 financial collapse and blowing up their balance sheet from $1 trillion to over $9 trillion on 4/19/22, the market has rewarded the V-shaped dip buyers. The Fed has been raising rates and decreasing its balance sheet to reduce the inflation it helped create, so “this time is different.” We may be in a U-shaped stock market recovery era where stock picking outperforms index buying. I am concerned that a recession in Europe may create a worldwide recession unless we elect God-honoring people to get us back on track. God gives us free will to make good or bad choices, and bad decisions can create generational chaos. Let the Holy Spirit be your umpire and guide you to a position of peace. Grace and Peace to everyone!

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

Issachar: Active Alternative & Defensively Managed Like A Hedge Fund!

Let the peace that Christ gives control your thinking. It is for peace that you were chosen to be together in one body. And always be thankful. Colossians 3:15

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: 4020-NLD-08/29/2022

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Issachar Fund
c/o Ultimus Fund Services, LLC
4221 N. 203rd Street, Suite 100
Elkhorn, NE 68022
866-787-8355
337‐983‐0676

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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: 3538-NLD-11/07/2023

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