Managing Risk! The Issachar Fund holds about 3% in growth stocks, 3% in an inverse bond fund ETF, 80% in a high-yielding short-term fixed-income ETF, and 14% in a high-yielding money market fund! Interest rates and risk have risen, and more stocks were sold as our sell-stops were triggered. The market has not been rewarding stock investors, and junk bonds are trading well below their 50-day moving average, indicating a lack of investor appetite for risk. I believe there are times to be invested and there are times to sit patiently. I have learned that market corrections have always presented incredible opportunities after the sellers capitulate and buyers step up. The selling will likely continue until a significant event causes a market bottom, but we are not there yet. My advice is always to respect and manage risk to invest long-term. Managing risk means cutting losses small (less than -8%) and letting winners run (more than 20%). (There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.)
The Fed sold another $22 billion of bonds from its $8 trillion balance sheet, attempting to fight inflation! The Fed helped create the inflation it claims to be fighting, and the more bonds it sells, the higher rates rise. Higher rates lead to higher interest costs, bigger federal deficits, and higher taxes, which can crush the economy, stock, and bond market. This is not a time to be fully invested, in my opinion.
Coal stocks have been trending higher as oil prices have soared! Wind and solar stocks are in a downtrend because they can only provide less than 10% of our daily energy. Uranium stocks have been on fire as nuclear becomes a more viable alternative energy. Clean-burning natural gas is near an all-time low as fossil fuels are demonized. So much for the “green new deal” (wind & solar) saving the planet; it probably will not happen in our lifetime. God created oil in abundance because he knew we needed it to survive.
It is now almost cheaper to buy a new home than an existing one! The median new home sells for $416,000, while the median existing home sells for $396,000. Existing home sales are at their lowest since 2010, with 90% of mortgages locked in below 5%. Homeowners do not want to sell their existing homes because mortgage rates are near 8% and rising. When new is cheaper than old, something is wrong.
The S&P 500 index is trending below its 50-day moving average on above-average volume and is down -6.3% since 7/31/23, near correction (10%) territory! Inflation is rising because the Fed printed too much money. Biden was selling down our oil reserves to keep oil prices low, but they have stopped because we are almost empty. Saudi Arabia and Russia have reduced oil output to increase prices, and we are stuck buying more oil at inflated prices from people who do not like us. What happened to America’s energy independence we enjoyed a few years ago?
Bottom line: This is a time to be lightly invested while the market finds a bottom, and we are due for an oversold rally. We could have a Follow Through Day (FTD) this week if one of the major indexes finishes up over 1.6% on greater volume. If we get an FTD, my watch list of stocks to buy is full of candidates. The Artificial Intelligence (AI) revolution could be more significant than the “cloud” and will present incredible opportunities for growth if one has money to invest. The key is to manage risk to stay in the game for the long term. Nearly one-third of all outstanding US debt must be refinanced in the next 12 months, so $2 trillion in annual interest expense is coming quickly. As yields climb, the dollar is trending higher, but that could reverse soon. If gold bottoms and trends up from its steep decline, that could be a sign the dollar will turn lower. Healthcare, utilities, real estate, home builders, consumer staples, banks, and junk bonds are in downtrends, so there is little place to hide. However, the golden goose of capitalism is still alive, and I believe America’s stock market will find a way to head higher in the long run. Grace and peace to Everyone!
Be strong and courageous. Do not be frightened and dismayed, for the Lord your God is with you wherever you go. Joshua 1:9
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. NLD Code: 3393-NLD-10/2/2023