HAS THE TRAIN LEFT THE STATION?

Posted October 28, 2011 by admin. tags:Tags: ,
Train


photo courtesy of Train Chartering & Private Rain Cars

Written by Nathan White, Chief Investment Officer, Paragon Wealth Management

The Europeans finally decided to come up with a plan and not commit hara-kiri after all!  Now it is just a plan and the devil is always in the details but this crisis has been well within their means to tackle from the beginning if they would just stop being total imbeciles.  On top of the good news from Europe came a better than expected third quarter GDP report that shows a recession is not in the cards.  At 2.5%, GDP growth is still below trend but well away from a recession.  The consumer, who has been erroneously continued to be reported missing since 2008, came in strong.

All of this combined to help the markets make a decisive breakout today above the range of the last two months.  The market have moved so fast that with two days left it could put in the best October ever!  The rally has been so fast that it has surely left many behind creating the opposite of what is called a bear trap.  It’s basically a situation where one wants to buy but is hesitant because the market has just made a tremendous unlooked for rally and you get caught waiting for a pullback that never comes.  Finally, you give in and buy at much higher prices.

On October 4, the market briefly dipped into official bear market territory and sentiment was extremely negative.  I think it’s almost comical but representative of how the market likes to do the opposite of what is expected in  that the bear market lasted all of one day!  One month later and we’re almost 20% higher than the low of that day!

The first few days of the rally was caused mainly by short covering ahead of earnings season.  Earnings seasons unfolded generally strong again and without any major negative outlooks which kept the market moving upward.  Now as earnings announcements are ending the Euros finally made a plan and voila – the markets rocketed upward.  There are still quite a few shorts holding on to hope of a crash and investors who need to catch the train that left before they were ready.  The only stop before the end of the year could come from ruckus created by the Congressional Super Committee formed after the delightful debt ceiling battle which needs to find $1.5 trillion in budget savings by Nov 23.  I’m sure that process is just moving smoothly right along…..

Disclaimer
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’s Advice on Bonds

Posted October 27, 2011 by admin. tags:Tags: , , , ,

Luke Tait and Dave Young from Paragon Wealth Management discussed bonds in this short video. Watch the video to listen to their advice and learn what you should do as an investor. 

Disclaimer
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 Probability Of A Recession

Posted October 21, 2011 by admin. tags:Tags: ,
Rolling the dice

Written by Dave Young, President of Paragon Wealth Management

So are we going to have a recession or not?  Every time the market drops a thousand points it seems as though stocks are priced as if there is going to be a severe recession. Listening to the commentators you would think the world was going to end any day.

As we have mentioned repeatedly over the past few months, the indicators that we track haven’t shown a high probability of recession. We don’t discount the fact that we may end up in another recession but up to now the high level of pessimism is not consistent with what our indicators are showing. This is in contrast to the endless interviews of advisors proclaiming that the next recession is just around the corner.

In the update we received today from Ned Davis Research much of the data they present doesn’t indicate an imminent recession either. As a matter of fact, some of the data looks more promising than it has since the sell off started last summer. Below are some of the statistics they sent us in our update.

The Philly Fed’s general business index surprised economists with a big positive jump of 26.2 points to 8.7. It was the biggest increase in 31 years and the 4th largest on record. Optimism about the future also improved.  The future activity index rose to its best level in six months.

The conference board’s Leading Economic Index (LEI) rose 0.2%, up for the fifth straight month.  The CEI rose 0.1%, as all four of its components picked up.  According to the Conference Board, all composite indexes suggest “the expansion in economic activity should continue, but at a modest pace in the near term.” Overall the Board sees about 50% chance of recession in the next six months.

The Ned Davis Research Economic Timing Model rose to +16 from +12, which is historically consistent with moderate growth. Overall, the indexes were mixed but the positive news on the Philly Fed’s General Business Activity Index was very interesting.

Disclaimer
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.

From Bear Market Territory To Market Rally

Posted October 13, 2011 by admin. tags:Tags: , ,
Fall Colors in the Utah Desert

Written by Nathan White, Chief Investment Officer, Paragon Wealth Management

The markets have moved up about 12% from the low on October 4th. That’s a huge move for one week! If you were paying attention to the headlines you probably missed the rally, but that’s been the nature of the market for the last two months. Twelve percent is what people used to expect in a decent year from equities! Trying to trade this market has been very painful to a lot of people.

Just as sentiment got really bad and the market dipped into bear market territory what did the market do? Go up. The market rallied as the Europeans started to talk the right talk and the prospect that corporate earnings will be relatively resilient. Now it comes time to walk the walk. The rally has been on light volume and from short covering which means it could be just short-lived. What is crucial now is to hold these levels near the upper end of the range.  That will depend mainly on the Europeans actually implementing actions to deal with their sovereign debt problem rather than just talking. It will also depend on corporate earnings holding up for the most part in terms of results and forecasts. If we hold these levels we could have a nice fourth quarter to end the year. The set-up is forming now will see how the follow through goes….

Disclaimer
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.

Why Warren Pays Less in Taxes than his Secretary…

Posted October 6, 2011 by admin. tags:Tags: , , , ,
How Warren Buffett pays taxes


Photo credit:  Connected

Written by Dave Young, President of Paragon Wealth Management

President Obama says that his most important priority is to create jobs. With that priority, it does not make a lot of sense that he relentlessly attacks those who create most of the jobs in America, i.e. “the rich”.

For the past couple of weeks the president – and his new helper, Warren Buffett- have campaigned endlessly against the job creators who he says do not pay their fair share of the tax bill.

I agree that everyone should pay their fair share. That is common sense. However, I do not believe that Warren Buffett or the president should make up facts to mislead the public that the rich are not paying their fair share.

I work with wealthy people. Regardless of what the president says, these people pay a lot of taxes. It could easily be argued that they pay much more than their fair share.

As a matter of fact, the top 10 percent of earners pay 70 percent of all  federal income taxes. 

According to the Tax Policy Center, the average person making:

  • $50,000 pays $6,250 in Federal Income Taxes.
  • $75,000 pays $11,250 in Federal Income Taxes.
  • $1,000,000 pays $291,000 in Federal Income Taxes.

So if you make 20 times more than $50,000, or in other words $1,000,000, then you will pay 46 times more in taxes.

So you make 20 times more but pay 46 times more, and that is considered unfair? You are endlessly attacked and told you are not paying your fair share when in reality you should be getting a “thank you” card.

Do the rich get to use the roads more or do they get better police and fire protection? Do they get better protection from the military? I know they get much more attention from the IRS.

These are the actual numbers. The real numbers don’t back up the populist picture that the rich do not pay their fair share. They actually show the opposite.

So what about Warren Buffett? Why is he helping to distort the facts?

I’m only speculating, but he owns several large insurance companies. It is very much to the benefit of his insurance companies to have high tax rates. Because of the tax preferential treatment that insurance products receive, those companies  would benefit significantly from higher tax rates. In that way Buffett would benefit from higher tax rates.

Or maybe, Buffett is right that his secretary pays a higher rate than him. I would imagine she gets paid more than your typical secretary and is in a fairly high tax bracket.

Buffett built his reputation as a legendary investor in the 70’s, 80’s, and 90’s. However, for the past 13 years he hasn’t done much at all.

From June 30, 1998 to August 31, 2011 he has returned only 2.6 percent compounded to his investors in Berkshire Hathaway. That is 2.6 percent compounded over 13 years.

Maybe that is why he has been paying less in taxes than his secretary.

Disclaimer
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.

Blog Role

Meta