Deflation? Cash is a Position! The Issachar Fund is in Cash! The indexes are masking the damage beneath the surface as former leading stocks come under heavy selling pressure. We have been in a higher-risk environment where weeks of gains can be erased in a day, so I prefer to sit on the sidelines and patiently wait for my next opportunity. The Fed is concerned about the inflation they created, so they announced a more rapid “taper” and some 2022 rate increases on Wednesday, and the market rallied. However, on Thursday, the Bank of England announced it was raising its key interest rate by 0.25%, and the NASDAQ reversed lower below its 50-DMA. Remember, central banks have been printing “free” money since the bear market in 2008, so raising rates could halt economic expansion. I believe the market is trying to discount slower growth combined with inflation which could lead to deflation. If the market were anticipating a deflationary environment, I would expect to see consumer staple stocks (soap, toothpaste, toiletries) outperform consumer discretionary stocks like Home Depot and Starbucks, and they are! Since most of the big institutional money must stay fully invested, maybe they are moving to more defensive staple names because they anticipate a collapsing economy? Risk is high, and profit potential is low so winning by not losing sounds good for now. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed increased its balance sheet by $92 billion last week to an all-time high of $8.8 trillion! While the Fed says it will curtail its bond purchases, its actions speak volumes. If the Fed were serious about curtailing inflation, they would be reducing their balance sheet, but they are expanding it instead. It is no wonder why we don’t trust politicians and government officials who say one thing and do the opposite.
Bottom Line: Cash is a position, and that is where we are, for now. The Fed is sending mixed signals to fight the inflation they created, so I am looking for stocks to buy, but the greater opportunity may be on the short side. I plan to let the charts tell me where to invest, so patience is vital. Thank you for being patient with me, and I promise to do my best to honor God with all I have. I want to wish you and your loved ones a Very Merry & Blessed Christmas!
For God so loved the world, that he gave his only Son, that whoever believes in him should not perish but have eternal life. John 3:16
Ed Griffin (91) is the most intelligent man alive today that I know, and I recommend his books!
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 www.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 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: 5739-NLD-12/20/2021.