The Issachar Fund (LIONX) is fully invested and leveraged in: Strategic Income, and High Yield Muni Bond mutual funds and ETFs as of 8/17/17. I sold the fund’s Preferred, Senior Loans and Junk Bond positions last week as they violated my sell criteria. I had no way to know that the S&P 500 would drop 1.54% (on above average volume) this Thursday but it is comforting to see LIONX’s NAV unchanged. It is hard to beat buy-and-hold in a bull market (last eight years) but when the market changes character one must recognize the change and manage ones portfolio so the money will be there when it is truly needed. I believe the market has put in a top and money will flow out of the momentum stocks and some money will find its way into safe haven plays like treasuries and munis. (Portfolio holdings are subject to change at any time and should not be considered investment advice. There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)
Money managers have the lowest cash levels on record and I believe they will be hard-pressed to buy on the dips. This lack of liquidity could steepen the decline further than most are expecting. Don’t believe everything you hear of TV. Everyone has a bias and many have conflicts of interest that are not in your best interest. The media will call a 20% decline a “correction” and a 50% decline a “bear market” but can your portfolio survive the next bear market? Do your own homework and study stock market history to learn from the past or find someone you can trust to protect your account just like they would protect their own account. Always remember, no one cares more about your money than you do.
President Trump is doing everything he can to make good on his campaign promises and the obstructionists are doing everything they can to delegitimize him. It is sad but some people would rather see America suffer than to see Trump succeed. The stock market has been rising since the election because the market may have been anticipating a pro-growth “Make America Great Again” Trump agenda. However, the market may be telling us that the swamp is now too deep to drain. If the campaign promises are delayed (mainly tax reform) then I would expect bonds (treasuries and munis in particular) to do very well. The next big obstacle will be to raise the debt ceiling. If Congress does not take action by September 29, the government will not be able to pay its bills. However, I believe saner minds will prevail and they will somehow avoid a catastrophe but one should never underestimate one of man’s biggest sins which is pride.
The FOMC minutes of the July meeting indicated that they are not certain on the timing of the Fed’s balance sheet unwinding. This indicates to me that the Fed will likely keep liquidity flowing in the market and with inflation running below the Fed’s 2% target they might not be able to raise rates in December as anticipated. Again, this could be good for treasuries and munis if interest rates do not go up as expected. I really enjoy participating in growth markets but I tend to get very conservative when the drawdown risk is high such as now. It is okay to dance but dance close to the exit.
God opposes the proud but shows favor to the humble. James 4:6
There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses. Investors should carefully consider the investment objectives, risks, charges and expenses of the Issachar Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-866-787-8355 or visiting 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., National Association of Active Investment Managers, and Kingdom Advisors is not affiliated with Northern Lights Distributors, LLC.
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The Fund may engage in frequent trading, leading to increased portfolio turnover, higher transaction costs, and the possibility of increased net capital gains, including net short-term capital gains that will be taxable to shareholders as ordinary income when distributed. The Fund may hold cash positions and 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 Fund’s investments in large capitalization stocks may underperform Funds that invest primarily in the stocks of lower quality, smaller capitalization companies during periods when the stocks of such companies are in favor. Investments in small-capitalization and mid-capitalization companies involve greater risks and volatility than investing in larger capitalization companies. Small and medium-size companies often have narrower markets for their goods and/or services and more limited managerial and financial resources than larger, more established companies. The Fund is non-diversified, which means it invests a high percentage of its assets in a limited number of securities. A non-diversified fund’s NAVs and total returns may fluctuate more or fall greater in times of weaker markets than a diversified mutual fund.
The Fund invests in debt instruments which have varying levels of sensitivity to changes in interest rates, credit risk and other factors. Many debt instruments are subject to prepayment risk, which is the risk that the issuer of the security will repay principal prior to the maturity date. The Fund could lose money if the issuer or guarantor of a debt security goes bankrupt or is unable or unwilling to make interest payments and/or repay principal. Changes in an issuer’s financial strength or credit rating also may affect a security’s value and have an impact on Fund performance. The value of the Fund’s investment in fixed income securities will fall when interest rates rise and the effect of increased interest rates is more pronounced for intermediate-term or longer-term fixed income obligations owned by the Fund. The Fund will invest a significant portion of its assets in securities that are rated below investment grade or “junk bonds.” Junk bonds may be sensitive to economic changes, political changes, or adverse developments specific to a company. These securities generally involve greater risk of default or price changes than other types of fixed-income securities and the Fund’s performance may vary significantly as a result. The floating rate loans in which the Fund invests are usually rated below investment grade and are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities and may be less liquid than higher rated debt securities.
The value of the Fund’s asset-backed securities may be affected by changes in interest rates, the availability of information concerning the interests in and structure of the pools of purchase contracts, financing leases or sales agreements that are represented by these securities, the credit worthiness of the servicing agent for the pool, the originator of the loans or receivables, or the entities that provide any supporting letters of credit, surety bonds, or other credit enhancements. The Fund’s investment in municipal securities carries additional risk including changes in federal, state or local laws that may make a municipal issuer unable to make interest payments when due. Municipal securities backed by current or anticipated revenues from a specific project or specific assets can be negatively affected by the inability to collect revenue, for the project or from the assets. Moreover, an adverse interpretation of the tax status of municipal securities may make such securities decline in value. In addition to the risks typically associated with fixed income securities, loan participations carry other risks, including the risk of insolvency of the lending bank or other intermediary. Loan participations may be unsecured or not fully collateralized, may be subject to restrictions on resale and sometimes trade infrequently on the secondary market.
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NLD Review Code: 3620-NLD-8/18/2017