FIVE LESSONS LEARNED THE PAST 12 MONTHS

Posted September 27, 2012 by admin. tags:Tags: , , ,
The Canyon


Written by Dave Young, President of Paragon Wealth Management

“Buy and Hold” strategy doesn’t work.
The investment strategy that Wall Street and mutual fund companies constantly promote called “buy and hold,” has been a complete failure over the past 12 years. It has generated negative returns when adjusted for inflation.

Market forecasts by “experts” provide no benefit. 
Most forecasters completely missed this decline. The majority also missed the recent rebound.

Set your risk tolerance level.
Setting your risk tolerance properly before investing is critical to success. You must be comfortable with the amount of volatility in your portfolio or you are likely panic and sell at the wrong time. Once again, hoards of investors bailed out at the market bottom and then missed the entire rally.

Expect the Unexpected.
When building your retirement plan, hope for the best but plan for the worst.

Follow a disciplined, proactive investment strategy.
Remove emotion from your investment process. In the investment world, decisions based on emotion are usually wrong.

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.

Walking the Tightrope

Posted September 24, 2012 by admin. tags:Tags: ,
The Fall hills of Utah

Written by Dave Young, President of Paragon Wealth Management

Investing has always been difficult.  I’ve managed money long enough that I’ve
experienced and survived the Crash of 1987, the Asian Crisis in 1996, the Tech
Wreck from 2000 to 2003 and more recently the Crash of 2008.  One of my fundamental biases has always been
a mistrust of the markets mixed in with slight paranoia.  I believe that mindset is one reason why
Paragon is still managing money after 26 years.

What has been different for the past couple of years is the
length of the cycles that we track.
Historically, markets and sectors trend consistently for six to eighteen
months – or longer.  Much of our
historical outperformance has come from our ability to lock onto those trends
and generate excess performance in our client accounts.

Since 2010, those trends have been much shorter with much
more back and forth motion.  In addition
to the usual factors that effect the markets positively and negatively there
has been a new elephant in the room.

That elephant is Government.
There have been issues created by government actions at home and in
Europe.  Then you add in the effect of hundreds
of new government regulations on the economy, a government spending trillions
of dollars more than it has and a federal reserve stimulating the economy,  i.e. QE1, QE2 and QE3.

I won’t even go into the effects of market uncertainty
created by the upcoming presidential election.
That election will determine whether we move toward an even bigger
government and more regulation or we let
the free market control our economy.
Not to mention the effects of the fiscal cliff we are facing after the
election regardless of who is elected.

Because the government factor is more difficult to measure
and more random, I believe that it has contributed significantly to the shorter
term, back and forth trends.   This
uncertainty has added additional inputs to the way that we manage money and has
at least temporarily, forced us to be more conservative than we would like.

Even when our models are completely bullish we still have to
hold back some cash because of the increased level of uncertainty created by
the government.  It is frustrating to
hold extra cash,  but it does allow us more
flexibility to deal with unknowns that may occur.

There is an old saying that bulls make money, bears make
money but hogs get slaughtered.  Right
now you could call us moderately bullish but definitely not hoggish.

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.

QE or Bust

Posted September 13, 2012 by admin. tags:Tags: , , , ,
The Federal Reserve Chairman

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

The Fed announced its widely anticipated QE3 today. Much of the rally over the past
few months has been built on expectations of another round of QE and we saw the market gain another 200 points for the day.

There have been many valid risks throughout the year
(Europe being the largest) that have made investors hesitant to join in the
game, but now that the year is getting closer to the end they are feeling like
they can’t miss any more of it.  The US markets have broken through the
years high on weak volume and with central banks around the globe now getting
ready to provide more fuel for the fire there could more upside to come.
So many are waiting for a pullback that it just might not come…yet.  It is
looking more and more like the pullback might not come until after many have
finally capitulated and bought and by then the S&P could easily be in the
1475 -1525 range.

Our models have been primarily bullish all year but with
some reservations due to the possible severe negative consequences that would
unfold if Europe went off the cliff or the slow recovery in the US got
derailed.  To hedge against these risks we have been holding around 10
-15% cash in our Top Flight model for some time and 10 -20% cash in our Managed
Income model.  The cash holding has been a drag versus the S&P 500 for
Top Flight and caused it to lag, but considering the possible risks it was an
appropriate trade-off.  The Managed Income model has performed well for the
year while avoiding Treasuries and we have been taking some profits as income
oriented assets are getting pretty rich at these levels due to investors search
for yield.  At this point the risk of continuing to own many of these
assets is starting to exceed their potential return.

As for Top Flight, the models may place it back into fully
invested mode to ride out the rest of the rally as the structural problems
facing the markets get kicked down the road again.  The election
ramifications and the fiscal cliff will be the next problems to be concerned
about (before Europe comes around again!).

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.

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