Market Update: 10-17-22

Respecting Risk!   The Issachar Fund is 94% in Cash! I purchased a 3% position in an ETF that shorts junk bonds designed to go up if junks go down, and it has been working in our favor. Issachar is 1% long the dollar and 5% short the market. My conviction level is increasing on the short side as our short positions continue to profit from declines in the market. Inflation reports from last week (PPI & CPI) confirmed that inflation is still “hot” and has not peaked. It will not be easy for the Fed to put the inflation genie back in the bottle, and their comments lead me to believe they will not stop until they break something. I do not see anything fundamentally changing that would turn this Bear Market into a new Bull Market. However, the November elections could give investors a reason to invest today with expectations of a higher return tomorrow. I see investors buying and holding with the hope the market will return in their lifetime. Since 1990, I have always respected risk and tried to manage it by selling when my perception of risk is high and buying when risk is low. There are times to be on offense, and there are times to stay on defense. The defense is on the field until we get the ball again. Once we get the ball, I plan to run hard and protect the yards we have made. If you believe I will do what I say, please consider adding to your account and tell a friend about Issachar. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

The Fed’s balance sheet declined by $84 million last week, which is flat! The current balance sheet trend has been declining at a 5% annualized rate since April 19, 2022. However, the Fed Funds annualized rate of increase is off the charts through the roof, skyrocketing, and they are expected to raise rates another 75bps before the November 8th elections. Expanding the balance sheet from $1 trillion to $9 trillion (2008 Financial Collapse to 4/19/22) had a more significant positive impact on the stock market, economy, and inflation than trying to slow it down by jacking rates 75 bps higher every six weeks. My point is if the Fed wanted to bring inflation down from 8.3% to 2%, they would unwind (QE) their balance sheet at a faster pace. However, the Fed knows that would likely throw us into a severe recession/depression as we have never seen. I believe the Fed will keep raising rates until inflation peaks, but it will take a long time before smart money returns to the stock market. Until then, my focus is on the short side.

Did you know it takes a 33% return to break even after a 25% loss? It takes a 150% gain to overcome a 60% loss, so keeping losses small is key to surviving and prospering in the long run. Here is a Loss Recovery Calculator to see what kind of return it takes to break even. Issachar is down less than -5% YTD, so it will take a 5.1% return to make us whole. In the right market, 5.1% is doable. I believe discipline and patience will be rewarded, but one must respect and manage risk. Diversification to manage risk worked in the past but has not worked this year, nor do I expect it to work soon. If we do not respect risk, it will eventually bite where it hurts. Everyone has a threshold of pain they will endure before they abandon their money management beliefs/system. If you want to stay in this game for the long run, draw a line in the sand and act if the line is crossed. Please do not stick your head in the sand and ignore risk. Risk must be respected!

Tidbits: New Zealand plans to tax the burps and farts of 36 million cows and sheep. Mainstream media claims that cows on the planet will be more dangerous to the environment for the next 20 years than all the cars combined. PM Jacinda Ardern’s government net zero plan includes a pledge to reduce methane emissions from farm animals by 10% by 2030 and up to 47% by 2050. Farmers warned the plan risks crippling domestic food production. Federated Farmers said that the plan would “rip the guts out of small-town New Zealand,” resulting in abandoned farms for trees. Do you think this kind of crazy policy could happen in America? Pfizer admitted that their vaccine was NOT tested to stop the transmission of the virus before it entered the market. Wow!

Bottom Line: Issachar is 6% invested in ETFs designed to go up if the market goes down. Inflation is not transitory, and the Fed will likely raise rates on November 2, right before the election. I do not see much good coming out of the market until then, so I plan to focus on the short side. There are only a handful of fundamentally strong stocks bucking the decline. However, their chart patterns are not in a buyable position, so I will exercise discipline and patiently wait until the market bottoms and I get confirmation from price and volume. I do not try to pick bottoms or catch a falling knife because I learned that luck and hope are not long-term investment strategies. Avoiding life-changing losses by cutting losses small is how we survive in the short run and win in the long run. The S&P 500 Index is down about -24% YTD! Grace & Peace to Everyone!

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

Issachar: A Buy & Hold Alternative Actively Managed Like A Hedge Fund!

I can endure all these things through the power of the one who gives me strength. Philippians 4:13

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: 4138-NLD-10/17/2022.

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