The Issachar Fund (LIONX, BRI, ESG) is 100% in Cash on Sunday, October 25, 2020. I sold all stock positions last week as stops were hit in a wave of low volume selling. I believe short sellers are hitting many leading stocks, and there appears to be a lack of buying conviction ahead of the election, so prices are falling. The election uncertainty may dampen big money conviction buying mainly because the two political parties are different. One party is generally considered good for the stock market, while the other party may not be so good. I believe knowing when to hold what you have, or sell is key to long term financial success. I do not buy and hold or fall in love with any stock. If I am not being rewarded for taking risk, I like to step aside and wait for the next pitch. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The S&P 500 and NASDAQ 100 Indexes are trading slightly above their flattening 50-day moving averages on light volume! The trend is uncertain, and investors’ appetite for risk seems weak. On a positive note, The Fed is on our side, committing to keep rates low for a long time. Safe-haven assets like the dollar and treasury bonds have been falling. The dollar is down -2% since peaking on September 25th. Rates have been rising, and the Treasury 20-year bond has lost over -7.5% since peaking on August 4th, so something is amiss. Investors could be demanding higher yields because they believe more debt will be issued to finance more stimulus spending. I think the market anticipated another stimulus spending bill before the election, but it now feels like a compromise will not be reached ahead of the election.
The Fed increased its balance sheet last week by $25 billion to an all-time high of $7.1 trillion! This newly created money has to go somewhere, but I do not see it pouring into the stock or bond market like in recent balance sheet additions. Maybe this new money is just sitting in cash until after the election results are known. Time will tell, and I believe opportunities may be available for those who chose to see and act accordingly.
The Fed is buying bonds when it increases its balance sheet, but it does not seem to be working to keep rates low! This may not be a good sign for the economy and stock market if the Fed cannot manipulate rates lower. The annual deficit is already over $3 trillion, and another $2 trillion of stimulus spending would put us closer to $30 trillion in total national debt. I do not think we will ever pay off this debt, nor will congress decide to stop deficit spending. I believe the “market” will eventually force us to stop spending money we do not have, and that will be a day of reckoning that will likely cause life-changing losses for buy and hold investors.
If there is no stimulus before the election, then I expect the market to drift lower! As the market gets a clearer picture of the election outcome, it will start trading on that information, and I seek to take advantage of opportunities as they arise. For now, I am patiently building my watch list of growth stocks forming bases and proper buy points.
Bottom Line: LIONX is in cash patiently waiting for a clearer picture of the election outcome and the new opportunities it might bring. I am optimistic that Trump will win reelection, and the market will continue higher. If I am wrong, the consequences could be life-changing, so I believe caution is warranted. Rising yields and a falling dollar has me concerned the market may be preparing for a bad outcome. I believe knowing when to hold ’em or fold ’em is key to long term financial success. During this uncertain time, I like to put my faith in something that will never change, and that is God’s Love for us. Trust then Believe that His Grace is sufficient, and His mercies are new every day.
My grace is sufficient for you, for my power is made perfect in weakness. 2 Corinthians 12:9
LIONX is a BRI/ESG, Tactical, Alternative, Mutual Fund Actively Managed like a Hedge Fund.
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. (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 making an investment decision. For more information regarding the fund, including current performance, please visit www.issacharfund.com. For more information on LIONX, please visit LIONX.net. NLD Review Code: 8091-NLD-10/26/2020