Health Care Passed… Is it Time to Run for the Hills?

Posted March 26, 2010 by admin. tags:Tags: , , ,
The North Lawn of the White House

photo by francisco diez

Written by Dave Young, President of Paragon

This seems to be the question of the day.

If you listen to the talk shows on the right they are convinced that this bill is going to cause the market to tank. If you listen to the left… they are convinced that health care reform is going to be their greatest accomplishment since Social Security and Medicare. (Never mind that “accomplishment” created a 50 trillion future deficit that has not been funded and will have to be paid by future generations.)

At any rate, forecasts abound.

John Kenneth Galbraith wisely said, “We have two classes of forecasters:  Those who don’t know – and those who don’t know they don’t know. After listening to forecasts from some really smart people over the past 24 years, I’ve concluded that no one has a clue what is going to happen in the future. There are just too many variables. The only thing that is constant is that the markets will do whatever they have to in order to prove the majority of investors wrong.

My take away from the passage of the heath care legislation is that since no one really knows what is in it (including those who passed it) no one really know how it will affect the market.

It’s too big, too complex and there are too many variables. It won’t begin to be implemented until after the 2012 elections (conveniently). By then, it may be repealed and significantly modified if Republicans regain a majority.

Who knows?

My guess is that it won’t have much effect on the market in the near term. In the longer term, the heath care reform should have the same negative effect on the economy as their other efforts; ie. increasing taxes, more regulation and the cost of a stimulus that doesn’t stimulate.

All of their fun and games won’t kill our economy but will definitely slow it down in the long-term.

Our free market economy will grow — albeit slower than normal. All of this “stuff” they keep throwing at us has the same effect as throwing a wet blanket over our economy. It still advances, but at a slower pace than it otherwise would.

Once again, the scenario above supports why we are so passionate about active money management versus passive management. Passive management strategies just sit there and follow the market – for better or for worse. Our active management strategies allow us to adapt and adjust our portfolio to whatever the market gives us to work with. That flexibility has been the key to much of our past success.

What do you think? Feel free to leave comments.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions.  Although the information included in this report has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy.  All opinions and estimates included in this report 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.  Past performance is not a guarantee of future results.

Paragon Wealth Management’s Story

Posted March 18, 2010 by admin. tags:Tags: , ,

The past few months we have been working on some new videos about Paragon Wealth Management to help investors understand who we are and what we are all about. This short video is an introduction our company. It also shares our views on active money management vs. buy and hold. This video was created for our website. If you would like to see steps 1, 2, and 3 mentioned at the end of the video, visit www.paragonwealth.com

Paragon
Wealth Management
is a provider of managed portfolios for
individuals and institutions.  Although the information included in this
report has been obtained from sources Paragon believes to be reliable,
we do not guarantee its accuracy.  All opinions and estimates included
in this report 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.  Past performance is
not a guarantee of future results.

The World Didn’t End After All…

Posted March 11, 2010 by admin. tags:Tags: , , , ,
Storm Clouds


photo by eflon

Written by Nathan White, CFA

Just over a year ago the world seemed as though it was about to end. Fear ruled the day. The Dow Jones Industrial Average bottomed out at almost 54% below its peak from October 2007.

I highly doubt that you could have found anyone at that time who believed that one year later the Dow would be around 10,500. At the time you would have been looked upon as a fool for saying so!

During that time and the subsequent market rebound, active managers were able to position their portfolios to take advantage of the changing market. Flexibility is a significant advantage to the active money manager.

During turbulent times they are able to take advantage of market dislocations. This is not to say that they always get it right, and most don’t, but that does not mean that active management does not work, but rather that one should be selective in choosing an active money manager.

Many passive managers believe there is no way to obtain an advantage over the “rational market” during those situations. My experience has shown that until humans become devoid of emotions, the market will always get pushed to extremes, and it is these moments that offer opportunity for the savvy investor!

Paragon
Wealth Management
is a provider of managed portfolios for
individuals and institutions.  Although the information included in this
report has been obtained from sources Paragon believes to be reliable,
we do not guarantee its accuracy.  All opinions and estimates included
in this report 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.  Past performance is
not a guarantee of future results.

The Tsunami that Never Came…

Posted March 4, 2010 by admin. tags:Tags: ,
The Tsunami


photo by jervetson

Last week my wife and I were in Maui. We got a call about 7:00 a.m. and were informed by a nervous voice that a tsunami was going to hit the island later that morning. We were told that since we were on the 4th floor of a beach-front resort we would have the option to stay or leave. Everyone on the second floor and lower was being evacuated.

So we had to decide whether or not to stay. They told us that since we were on the upper floor we would likely be safe from the wave. Then they added, as long as it doesn’t knock the building down. Finally, they added that we “should” be okay since the building was only three years old and was built to higher standards.

So we decided to stay. My wife suggested that we at least move down to the basement for protection. I told her I didn’t think that was the best idea.

The wave was supposed to hit at 11:05 a.m. We went out to our balcony to watch the tsunami hit. We could see hundreds of worried looking people that had been evacuated to the tops of their buildings. Out in the ocean the whales were extremely active, blowing and jumping out of the water.

The tsunami did not show up at 11:05. After about half hour I started flipping through the TV channels. All the local channels were in a frenzy reporting anything that seemed like it might be related to the incoming tsunami. The national channels on the mainland made it sound even worse.

We waited and then waited some more. We were stuck at our condo because all of the roads were closed. The short version of the story is that the tsunami never came. Just like the doomsday swine flu never really did much last winter, or the widely advertised Y2K disaster that never occurred.

The tsunami experience reminded me of what we see all the time in the market. Rumors are spread by the media, and those rumors drive investors’ emotions, which cause people to go into a buying frenzy. Sometimes it works the other way, and the rumors push people into a selling frenzy. More often than not, what has been rumored never occurs. But it does create a lot of drama.

The moral of the story is that successful traders don’t make their decisions based on rumors. Even more important is that they don’t act on emotion. Both are toxic to successful trading. At Paragon Wealth Management we invest using quantitative models, which are designed to remove emotion from the investing process.

Paragon
Wealth Management
is a provider of managed portfolios for
individuals and institutions.  Although the information included in this
report has been obtained from sources Paragon believes to be reliable,
we do not guarantee its accuracy.  All opinions and estimates included
in this report 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.  Past performance is
not a guarantee of future results.

 

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