What Should You Do About the Market Crash?

Posted September 30, 2008 by admin. tags:Tags: , ,

Dave Young, President of Paragon Wealth Management, did a live interview on KSL radio today with Doug Wright. They discussed the current stock market situation. Click on one of the links below to listen to the show.

Download ksl_show_sept. 30 2008.WMA (30 min. without commercials. Works on a PC)

http://pandora.bonnint.net/audio/2008_09_30_doug3.mp3 (60 min. with commercials. Works on all computers)

Some highlights from the show:

– Advice for investors.

– In reality this is the 34th bear market we’ve seen since 1900.

– "When people get greedy, I get scared. When people get scared, I get greedy." (Warren Buffet)

– Why did the banks go out of business?

– Should we have this "Wall Street Bailout?"

– How bad are things? Is this like the Great Depression?

– What happens to your shares in the banks that went down?

– When the stock market drops this much, where does that money go?

– The media makes things look worse.

– What should you do if you have pensions, IRAs, etc.?

– Is our economy weak?

Dave has another interview with Doug Wright this Sunday, October 5, at noon after General Conference on 102.7 FM or 1160 AM. The interview was pre-recorded today. It is about an hour. They discussed Dave’s "Seven Steps to Building Wealth," investing tips, budgeting ideas, how to stay out of debt, etc.

Feel free to leave comments or questions. We’d like to hear your feedback. You can also call us at 801-375-2500.

Who’s the Government Bailing Out?

Posted September 24, 2008 by admin. tags:Tags: ,
American Flag

Written by Nathan White, CFA


photo by KaCey97007

Volatility continues…

“Tread carefully” is the mantra for this market.

One day you are tempted to sell everything and run for the hills, and the next day you can’t believe what a great buying opportunity this is.

In this environment you want to identify quality assets and let the price come to you and do it in small increments.

Placing a large bet can lead to quick insolvency and many are tempted to put too much capital at risk. On the other hand if you don’t buy anything as the market goes down you are also throwing away tremendous opportunity.

I’m torn on the current government bailout.

It could save us from a market meltdown, but who is to say that the market would meltdown anyway? Maybe then we would be done with this and we wouldn’t need a bailout.

On the other hand, a bailout will come at significant cost which will have to be paid no matter what. If it saves the market in the short term it can only come at the expense of long term prosperity.

It is just like selling a call or buying a protective put on the economy or our standard of living — both protect on the downside, but limit the upside potential.

That may seem desirable in the short term, but we will definitely feel the frustration in the future as we strive to increase our standard of living, and the efforts seem to bear no fruit.

Paragon Wealth Management, a wealth management firm in Provo, Utah, is a provider of managed portfolios for individuals and institutions. Although the information included in this article has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this article constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Don’t Buy Stuff You Cannot Afford

Posted September 22, 2008 by admin. tags:Tags: ,

We saw this video the other day and thought you might enjoy it. It is a funny clip about not buying things you cannot afford starring Steve Martin. I don’t think credit card companies would like this video!

Investment Strategies for this Rocky Market

Posted September 17, 2008 by admin. tags:Tags: , ,
The New York Stock Exchange

 

 


photo by Jaap Steinvoorte

Written by Nathan White, CFA

We are finally starting to see some true fear in the markets.

The VIX index, which measures market volatility, is above 30. Once this “Fear Index” gets into this territory, it indicates that market participants are getting taken out whether they like it or not. These reading have the tendency to shake out the last of the sellers.

The hard part is that the indicator can get worse sometimes before it gets better, and it takes a lot of nerve to buy when the market is acting so badly.

So although this can be a good time to buy for the long-term, the problem is that you must stay solvent during the short term in order to take advantage of it. That means being able to withstand some seriously negative days on the market.

Another investment strategy is to wait out the market volatility and not buy during the downdrafts but instead wait for a broad based rally that comes after the market has hit what looks like a bottom. This strategy can have less risk if the rally is broad based. The cost of the strategy is that you did not buy in a at market lows and if the rally is not broad based you might be buying in just as the market is getting ready to roll over again.

Another quick note…

The government has done a masterful job of delaying the pain of a bear market with the bailouts. Why don’t they just get out of the way and let the market do its thing? We might have more short term pain, but then it would be done! Pull the sliver out and let’s heal!

Every time the government bails out somebody it comes at the cost of long–term prosperity.

There is a consequence for every action and the more obligations the government assumes will reduce the upside potential of a recovery and our future standard of living.

Stay tuned…

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this article has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this article constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Today was an Ugly Day in the Stock Market

Posted September 15, 2008 by admin. tags:Tags: , ,
Bad Day at the Office

Written by Dave Young, President

Today was an ugly day in the market.

It was the worst day in seven years for the Dow Jones Industrial Average. The bankruptcy of Lehman Brothers combined with the sale of Merrill Lynch combined to put the market in a very bad mood. Waiting in the wings with more potential negative dramas are AIG and Washington Mutual.

Based on historical numbers, this bear market is probably in the late stages.

Since last October the Dow Jones Industrial Average has dropped by -23%. It has taken a painfully long 342 days to grind its way down this far. We hit market lows back in July and now we are back just below those lows.

Historical median numbers for the 33 bear markets since 1900 are a -26.9% loss over 363 days. The last five bear market bottoms have occurred between August 31st and October 19th.

Our models are mixed right now.

While they aren’t flashing that we are at a bottom yet, they do indicate that we are close. Our advice at this point is that it is too late to sell, but also too early to buy. In other words, in our opinion it doesn’t make a lot of sense to sell at this stage of the market downturn.

Likewise, we may not have hit the absolute bottom yet, so we wouldn’t recommend taking new positions until a solid bottom is put in place and our indicators start recommending buying.

Our advice at this point is to simply hold your current positions.

No one knows what a reshaped Wall Street landscape will look like, but experience tells us that those who remain calm and make rational decisions with an eye on the long term are those who will most likely weather the current uncertainty.

If you are one of our clients, then your investment plan was put together with the long-term in mind. If you believe your circumstances have changed, please call our office and we will arrange a review and reassessment. In the meantime, do not let short-term market difficulties undermine your long-term rational planning.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this article has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this article constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

photo by Marmot

Whack-a-Mole Market

Posted September 10, 2008 by admin. tags:Tags: , ,
Wack-A-Mole Game

Written by Nathan White, CFA

 

Bad news after bad news just seems to keep popping up. As soon as we seem to knock down one item of bad news, FannieMae/FreddieMac, another just pos up – Lehman Brothers.

The market is definitely exhibiting the characteristics of a bear market with short sharp rallies that have no legs and just end up fading.

Another aspect of a bear market is when all sectors of the market, either together or one by one, get taken down. Financials were of course the first to go. Technology and most everything else went next.

The last bastions were Energy and Materials as they were supported by high commodity prices. Now that commodities have fallen off a cliff these sectors have also been taken out to the woodshed.

September is historically the worst month for the market and so far it is living up to its reputation (although I might make the argument that July is the worst).

What remains to be seen is whether this is the darkest time before the dawn.

You can’t have a bull market with some sectors going down while others are going up. There needs to be a broad based rally with all areas acting well.

So although oil going down might be good in the long term for the market (reducing production costs for industry) in the short term it can be bad if the effect is to take down the Energy and Material sectors. Look for rallies that have broad participation and staying power.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this article has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this article constitute the judgment as of the dates indicated and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

Can Your Happiness be Bought with Money?

Posted September 3, 2008 by admin. tags:Tags: ,
Kids dancing on the beach

 

 


photo by tony

This is a topic many have talked, written and argued about over the years.

Does money really make you happy?  If it does, can it buy you TRUE happiness?

Some people think that when they are rich, they will be happy. These same people think they will be happy when they buy a house, buy a nice car, finish school, get a better job, etc.

The point is you will never be truely happy if you wait for things in your life to happen before you can become happy. You can be happy at any point in life if you choose to be.

It is true that it is nice to have money and it makes life a lot easier when you have it, but money itself doesn’t really make you truely happy.

Below is a personal story from Tina, one of the most successful bloggers I know. She recently quit her job and started blogging full time. These are her thoughts on money and happiness.

“I had a wonderful job at a phenomenal company. I had flexibility, an understanding boss, and a high paying salary. I loved my job. But after 6 years of expending myself on the job, trying out various professional roles, I felt that I’d grown beyond the fixed positions available at the company.

I’m not going lie, having a lot of money is nice. Money can buy you things, nice things.

However, the cliché is true – money cannot buy you happiness, and having it doesn’t mean that you are a successful person. After several years, I realized that the more money I made, the less satisfied I became. Days started to blend into one another, time flew by, and I deeply longed for something with more meaning.

Upon realizing that I was trading my time for money, I started experimenting with various passive income sources. I’ve started and ended businesses, I’ve turned hobbies into professional pursuits, and I’ve tested out investment avenues.

In the end, I’ve learned that it doesn’t matter what you’re doing. As long as you are doing something that expresses your passion, you will excel and you will gain satisfaction. I’ve also learned that starting something from nothing and watching it grow is deeply rewarding.

Through my quest to finding my passion, I discovered blogging as a platform where I can share ideas and lessons learned that are closest to my heart, as a way to serve others. For the first time in my life, I feel that I am living my life purpose.

Words cannot express the joy I feel while writing for Think Simple Now, and the numerous times when feedback from readers has brought me to tears. This just feels right.”

I agree with Tina. It is important to find your passion in life whatever it may be, and not rely on money to make you happy.

Feel free to leave comments about this article.

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