The Fund holds about 85% in short-term bonds and about 15% in stocks. I added to our stock positions last week and I expect to increase stock exposure this week if earnings come in better than expected. A few leading growth stocks were crushed after releasing negative earnings and guidance last week, but I am finding many more leading stocks rallying after positive earnings surprises. This is very encouraging to me because I believe the “leaders” (best stocks in the best groups) often pave the way for the indexes to follow. I am more optimistic than last week as I “follow the leaders” and trust they will tell us when there is trouble ahead.
Real GPD for the 1st Quarter grew at an annualized rate of 3.2%! This is far above expectations and the market seems to like this kind of positive economic growth. Inflation is very low, and bonds are also doing very well. Junk bonds are confirming the euphoria and trending higher indicating to me that investors still have a hungry appetite for risk. Two-year German, French and Japanese bond yields have negative yields while the 2-Year US Treasury bonds yields a positive 2.3%. Imagine loaning money to Germany, France and Japan and having to pay them interest to loan them money. It makes no sense to me but that is what is happening across the pond. I pray that will never happen to us but that is what can happen when government promises a bunch of “free stuff” and spending gets out of control. As I see things, America is still the best place to invest. Having a 2.3% yield on our 2-year Treasury bond may explain why the US dollar continues to trend higher and trades near an all-time high (relative to other currencies). One potential negative of a rising dollar is that it tends to weaken profits of companies that export goods to weaker currency countries. I have to conclude that Trump is living up to his promise to “Make America Great Again”!
The S&P 500 Index trading at the 2940 resistance area and I expect it to break through and head higher. The S&P 500 Index (large-caps) high of 2940 was last reached on September 21, 2018 so basically the index is now “flat” or back to break-even. Let’s not forget that the index dropped over 19% ending on Christmas Eve and has since had a V-shaped rally back over 25% just to get back to this current break-even level. The Russell 2000 Index (small-caps) has about 8% more to go before it is back to break-even and it is also trading near a major resistance level of around 1600. I believe that both indexes will break through these levels of resistance and the up-trend will continue. However, I will let price and volume confirm my convictions because “price” never lies.
What will you do the next time the Fed raises rates and the market declines beyond 19%? If you plan to buy and hold through the next bear market, I beg you to consider your options and find an edge that may help protect your hard-earned money. An edge is an indication of a higher probability of one thing happening over another. As a risk manager, I do not plan to sit through the next bear market because I believe it could be a life-changing event that I do not want to experience. The Fed and global central banks have been pumping money into the system since the 2008 financial collapse and I believe this “free money” experiment could end very badly. Sooner or later, we will have to stop kicking the can down the road and pay the price for this excess money printing but for now let’s enjoy the ride while it lasts. I plan to let you know when I see the caution lights start to flash.
Bottom line: I believe the trend is your friend so let’s ride the wave while it lasts. I have strong opinions about what I think will happen but when I am wrong, I try to be quick to correct my mistakes and never argue with “price”. I have heard that more money has been lost preparing for a correction than has been lost in corrections. If you make a mistake, admit it, learn from it and don’t repeat it.
For God was in Christ, reconciling the world to himself, no longer counting people’s sins against them. And he gave us this wonderful message of reconciliation. 2 Corinthians 5:19
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, Inc is not affiliated with Northern Lights Distributors, LLC.
Important Risk Information
Mutual Funds involve risks including the possible loss of principal.
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 to be incorrect and may not produce the desired results. Past performance is no guarantee of future results.
S&P 500 Index is an unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large- cap stocks.
Russell 2000 Index is a small-cap stock market index of the bottom 2,000 stocks in the Russell 3000 Index.
NLD Review Code: 3227-NLD-4/29/2019