Update: 08-14-23

Downgrades, Distribution & Defense!   The Issachar Fund is 100% (on defense) invested in a high-yielding money market fund! Risk increased last week as more bank downgrades hit the market, triggering our sell stops. I expected the NASDAQ tech-heavy index to hold support at its 50-day moving average (DMA), but support was broken on Friday, finishing the week lower. However, the S&P 500 big cap index held support at its 50-DMA, so this week could be pivotal for market direction. Based on the busted price and volume charts of the recent leading Artificial Intelligence (AI) stocks, I believe the market is headed lower. Leading AI chart patterns are broken, and it will take some time to build proper bases to buy from, so I will patiently wait for proper setups to buy. The AI meme theme stocks have led the recent bullish advance, but recent earnings releases are not supporting the euphoric expectations, so the stock market may be headed for a steep correction. (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)

As inflation pushes consumer prices higher and real wages lower, more Americans are turning to credit cards to make ends meet! Credit card debt rose $45 billion in the second quarter (a 4% increase) to over $1 trillion for the first time. The national average for a 30-year mortgage is at a new 23-year high of 7.68%. New home buyers spend a record 40% of their income on a mortgage. Meanwhile, the median sales price of a home in the US is 560% of the annual income (China’s average is 3300%). In the 2008 housing crisis, the median sales price was 360% of the median household income, so 560% could be a stumbling block for the economy. This is the least affordable housing market in history. If the consumer is tapped out, how will earnings increase to drive stock prices higher? If home buying becomes more costly, the ripple effects could cause the next recession to last longer than most.

Higher inflation implies higher interest rates! The 10-Year Treasury Yield followed suit and rose to 4.16% last Friday, 16.5 basis points below its 4.33% peak achieved in March of this year. The US Government is on track to pay over $1 trillion in interest in one year. Tax revenue is down ~8% in the last 12 months, and spending is 40% more in 2023 than in 2019. Our spending problem could soon become a borrowing problem if our creditors demand higher rates or do not trust the US will pay them back.

The Fed increased its balance sheet by $2 billion last week, so maybe they have done enough to rein in inflation! Too many people were on one side of the bullish boat as the tide flowed out last week, revealing who was swimming naked. It may not be a pretty sight if the AI earnings expectations continue to disappoint. This may be a good time to batten the hatches and pull in the bullish sails. Just because the market has always recovered from every bear market/recession, I will not bet my life savings that it will recover in my lifetime. Therefore, I prefer to manage risk and avoid life-changing losses.

Bottom line: Cash is king (Issachar is on defense) as bank downgrades create more distribution (declining prices on above-average volume) which causes risk to rise. Mortgage payments at 40% of income and sales prices at 6-7x incomes are probably unsustainable. Inflation is still not under control, especially if the unions demand UPS to pay their drivers $170k/year. Do college graduates make this kind of money? If you want to invest for the long-term (a survivor), preserving physical and mental capital by managing risk is a good idea. Otherwise, the house wins in the end. I provide these weekly updates to let everyone know what I am thinking and doing in the Issachar Fund. If you know someone who might be interested, please forward this to them or send me their Email. Grace and Peace to everyone!

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

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

The Lord, your God, is gracious and compassionate. He will not turn his face from you if you return to him. 2 Chronicles 30:9

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: 3303-NLD-08/14/2023

Scroll to Top