The Issachar Fund (LIONX), is fully invested in Muni Bonds, Mortgage Bonds, International Bonds and Gold. I reduced our bond exposure last week due to a spike in rates which caused our bond positions to decline in value. I did not sell our gold position, but it is on my sell “watch” list in case I am wrong. I was expecting gold to “correct” because it was extended and due for some type of consolidation. However, I believe gold is under long-term institutional accumulation (near 6-year high) as QE expands and fiat currencies continue to lose value as more money is created out of thin air. The Chinese central bank has added 94 tons of gold to its reserves in the last eight months alone. Global central banks bought more gold in 2018 than any year since 1967, and they are buying at an even faster pace in 2019. I believe that Central banks operate the largest “legal” Ponzi Scheme and they may be preparing for a digital currency replacement of fiat currencies where gold would be used to buy a “one world” digital currency. I pray that I am wrong because I believe this could create life-changing losses that would be rampant especially for those not prepared. I view gold as an “insurance policy” against declining fiat currency valuations. Just like fire insurance, I hope to never “collect” on a claim but it sure helps me sleep well at night. I expect U.S. rates to resume their decline and bonds to advance in anticipation of the Fed lowering rates again at their next meeting on September 18th. My strategy approach is very flexible, depending on my perception of risk and where I see opportunity. Currently, I am finding the best risk-adjusted return opportunity in the bond and gold markets but that could change at any time. LIONX is not your typical mutual fund. It is a BRI, Risk-Managed, Trend Following, Alternative Hedge Fund-Like Mutual Fund that Seeks Low-Correlation to the major stock indexes. (Portfolio holdings are subject to change at any time and should not be considered investment advice.)
I am not excited to buy stocks! Major stock indexes rallied Thursday above their 50-dma as China agreed to “resume trade talks” in Washington D.C. early next month. Neither the U.S. nor China said anything about reducing the current trade tariffs. However, the “news/liquidity driven algo” market was looking for an excuse to trade higher, so it did. We are about 2% away from all-time highs in the stock indexes and a China trade deal could the “ice breaker” allowing the market to break through this “ceiling of resistance” at the highs. However, if we do not get a “trade deal” with China then I believe stocks could head lower. I look at a lot of stock charts everyday and I am not finding many stocks to get excited about. Many of the recent stock “leaders” have “broken” looking chart patterns of continued selling pressure and this causes me to question the sustainability of this low volume index rally. However, I believe that there is so much U.S. and foreign money/liquidity looking for a place to rest that it is pouring into the indexes with the largest market capitalizations and this trend will likely continue until it doesn’t. I may be fully invested but I never intend to fall asleep at the wheel and I am always looking for an exit ramp in case things don’t go as planned.
Negative yielding debt jumped $3 trillion in August to bring the total at over $17 trillion! Fed Fund Futures expect 3 rate cuts over the next 3 Fed meetings which will bring the target rate down to 125-150 bps by the end of the year. Other central banks are following suit and since the financial crisis in 2008, there have been more than 730 interest rate cuts around the globe. I believe the U.S. will see zero % interest rates in the near future which may cause major dislocations like we have never seen. The last time the U.S. had 0% rates was in 1942 during World War II and rates stayed near zero until 1948. Near 0% rates allowed the U.S. to pay down its debt accumulated during the war. I pray that we never see another military war.
The Business Roundtable announced that almost all of its CEOs signed a statement saying they were no longer going to run their companies with the primary goal of serving shareholders. Instead, CEOs would lead their companies to benefit all “stakeholders,” including “customers, employees, suppliers, communities, and shareholders.” Milton Friedman suggests that a firm’s only objective should be to act on behalf of its shareholders. I believe this major shift in CEO loyalty from the shareholders to the stakeholders is a generational “game changer” and will change how stocks are valued. A very interesting dynamic is happening before our eyes if we chose to see it.
For this people’s heart has become calloused; they hardly hear with their ears, and they have closed their eyes. Otherwise they might see with their eyes, hear with their ears, understand with their hearts and turn, and I would heal them. But blessed are your eyes because they see, and your ears because they hear. Matthew 13:15-16
Bottom line: I believe bonds offer a better risk-adjusted return over stocks. However, that could change if the market perceives of an imminent trade deal with China and stocks blast through resistance less than 2% away. Thanks for your Trust and Business and 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. If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. 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. If the Fund’s uses hedging instruments at the wrong time or judges market conditions incorrectly, the hedge might be unsuccessful, reduce the Fund’s investment return, or create a loss. The use of leverage can magnify the effects of changes in value of the Fund and could cause investors in the Fund to lose more money in adverse environments. Biblical Responsible Investing (BRI) is the term used to describe the activities of Christian investors who purposely align their investment choices to support their Christian beliefs. NLD Review Code: 7099-NLD-9/9/2019