Buy the Dip? Fed Still Buying!
The Issachar Fund is about 60% invested in the Building, Business Services, Chips, Finance, Machine, Medical, Metals, Real Estate, Retail, and Software. Leading stocks have been breaking down, and that is not a good sign. I locked in some gains last week and parked those proceeds in cash until the next opportunity presents itself. I believe the market is extended and due for a pullback, but I am not expecting the market to fall more than 5%. Seasonality since 1990, equities have tended to top around September 15th and bottom near October 9th, so caution is warranted. I can’t explain why this pattern has persisted, but it does. I believe that price is the arbiter of truth, so I try to focus on price and the volume moving price. The major indexes are off their highs, but the Fed has been buying bonds, which is a good sign. When the Fed buys bonds with money they created out of thin air, someone receives cash for said bonds, and some of those proceeds are often used to purchase equities supporting higher stock prices. As long as the Fed keeps liquefying the market with “free money,” I will likely maintain a bullish bias. However, when this “free money” printing press experiment begins to taper, I believe the “house of cards” may start to fall. At that point, I plan to raise cash, hedge, or short the market. Until the Fed takes his foot off the gas and taps the brakes, let’s enjoy the ride. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed increased its balance sheet by another $8 billion last week to another all-time high! However, our central bank is not the only one printing money at will; other global central banks seem to be more intoxicated at this seemingly never-ending money printing party. The European Central Bank and Bank of Japan are printing money faster than the US, which should tell us that things are not as good as they want us to believe. The scary part is we all seem dependent on the government to save us from a problem they helped create. I cannot see how this party will end without a massive hangover of life-changing losses. Now is an excellent time to reflect on God, spouse, kids, family, and business, and in that order.
Bottom Line: The market appears to be running out of gas as the indexes pull back, but the Fed seems to have our back as they keep the printing presses running. Investors have been rewarded recently for “buying the dips,” so we will see if they do it again. We are entering a seasonally weak period, so locking in some gains may not be a bad idea. We have about 40% cash, and I stand ready to do more selling if things do not go as planned. I expect the market to rally into the new year, but price and volume matter more than my opinion. However, nothing can replace the Wisdom of God we receive from the Holy Spirit living in us. Learn to trust the Holy Spirit in you since He will never lead you in the wrong direction.
Keep your life free from the love of money, and be content with what you have, for he has said, “I will never leave you nor forsake you.” Hebrews 13:5
The Issachar Fund is 100% committed to Biblically Responsible Investing (BRI) stocks.
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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: 5525-NLD-9/13/2021.