The Issachar Fund (LIONX, BRI, ESG) is 26% invested (74% Cash) in 13 leading growth stocks on Sunday, Jan. 31, 2021. Many LIONX stocks came under heavy selling pressure last week, so I reduced our risk exposure by selling stocks that did not meet my expectations. I believe the stock market risk level has risen to a point where the risk is slightly greater than the potential reward. If our remaining stocks fall out of favor, I will likely sell all positions and sit in cash until my perception of risk declines. My focus is on the indexes and leading growth stocks, and they are telling me that risk is rising. There is no way to know if this is a minor pullback or a major correction, so locking in some gains is not a bad strategy. I am pleased with our year-to-date performance, and I plan to maintain our lead. (There is no guarantee that any investment will achieve its objectives, generate positive returns or avoid losses.)
The S&P 500 index lost 2% on Friday as it traded down to its 50-day moving average (DMA) on above-average volume. The last time the index touched its 50-DMA was on October 26; then, it dropped another 3.75% in two days. Who knows what will happen this time, but risk is undoubtedly elevated, so caution is warranted. I believe the Fed will do its best to keep the markets liquified, and that could be enough to kick the can down the road. However, the market is bigger than the Fed, and if the market thinks we are headed for a recession, this could be the start of the mother of all bear markets. I have not sold any stocks short (betting that the price will decline) in over 18 months, but it is a tool I have in my toolbox should we enter a bear market.
Bottom Line: Risk has been rising, and the market has come under heavy selling pressure, so cash has been a good place to be. Short selling and short covering have caused a lot of volatility recently, so maybe it will take a little more time before the uptrend can resume. However, I am carefully observing the markets and will do what is necessary, seeking to maintain our edge over the indexes. The lights started coming on last week, so maybe it is time to leave the party before everyone rushes for the exits. When I am stuck and don't know what to do, I ask God for wisdom, and He always provides. May God's grace and peace be with you today!
"If any of you lacks wisdom, let him ask of God, who gives to all men liberally and without criticism, and it will be given to him" (James 1:5).
LIONX is a BRI/ESG, tactical, alternative, mutual fund actively managed like a hedge fund.
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 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. (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. For more information regarding the fund, including current performance, please visit issacharfund.com. For more information on LIONX, please visit LIONX.net. NLD Review Code: 4201-NLD-2/1/2021
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