Category Archives: Performance numbers

Market Update & How Wealth Is Created

Posted January 29, 2016 by paragon. tags:Tags: ,
golden nest egg_opt

Written by Dave Young, President & Founder of Paragon Wealth Management

Market Summary

While the stock market made significant advances in 2013 and 2014, last year felt more like a repeat of 2011 when the market went nowhere. In 2015, the S&P 500 experienced its first 10% decline in four years.

There were some winning sectors with technology, health care and consumer stocks posting modest gains. On the other hand, commodity, mining and energy stocks were a train wreck. Large stocks beat smaller companies and U.S. stocks beat out international ones. This year’s gains were focused in a minority of stocks.

No asset class posted double digit gains. In the past 28 years, that has only happened one other time (in 2001).

China and Greece continued to create financial drama. Emerging markets had a terrible year. Generally speaking, most stocks and sectors were in decline. In 2015, if you broke even as an investor, it would be considered a success.

Paragon Portfolios

Managed Income portfolio spent its time avoiding trouble. Many of the conservative asset classes it invests in ran into difficulty. Managed Income declined -2.8% for the year. This is its first negative year since 2008.

While we are never happy with a negative year, we were pleased it was able to avoid much of the downside experienced by the underlying asset classes it invests in. It was playing defense all year long.

Managed Income’s return from October 2001 to December 2015 is 5.14% compounded, which equates to a total return of 101.7% net of fees. (Please click here for disclosures.)

Top Flight portfolio had a good year considering positive returns were hard to come by — and those returns were in a relatively narrow group of stocks. Top Flight gained 3.71% for the year versus 1.41% for the S&P 500. Top Flight’s compound annual return from January 1998 through December 2015 is 11.7% versus 6.26% for the S&P 500. Top Flight’s total return for that period is 613.4% versus 194.0% for the S&P 500.

Paragon Private Strategies Fund’s recent audit showed an internal rate of return of 14.3% for the period from March 20, 2013 through Dec. 31, 2014. Our relatively conservative private equity fund has performed well in this difficult environment. We are planning to open a second fund in 2016. Please contact us if you are interested in exploring this investment option and for required investor qualifications.

How Wealth is Created

Making money is difficult. After a difficult year like 2015, it is important to go back to basics, evaluate your situation and make sure you are on the right path.

As financial advisors, we provide a variety of financial services like retirement, estate and business planning. However, our focus has always been on managing investments. Why? At the end of the day, if you aren’t effectively building wealth over time, most aspects of your financial plan won’t matter.

So it begs the question. What is the best way to invest? How can you invest to meet your retirement goals?

Step one. Invest in things that increase in value. Currently, money markets, CDs, bonds and fixed annuities are not likely to gain much value. Interest rates are at historic lows, and those investments are tied directly to those low interest rates. After inflation and taxes, most of these investments are actually taking you backward.

In order to build wealth, you have to invest in things that appreciate over time. With interest rates this low, only stocks, real estate and direct business investments meet the criteria.

Step two. Enhance your return by buying when prices are low and things are cheap. Conversely, you should be reducing exposure when prices are high. Is this easy? Absolutely not. It is completely counterintuitive and requires you to ignore your natural “fight or flight” inclination.

This is why we have been holding so much cash for the past eight months. Our models showed that the upside was limited — there was too much risk for the potential reward.

Let me explain by highlighting a study published last year by DALBAR, one of the nation’s leading financial research firms.

The study found that over a 20-year period ending Dec. 31, 2014, the average equity-stock-fund investor posted an average annual return of 5.19%, which compares unfavorably to the average annual return for the S&P 500 Index of 9.85%.

Going back 30 years, DALBAR paints an even gloomier picture, with the average equity-stock-fund investor earning 3.79% annually versus the S&P 500’s average annual gain of 11.06%.

The reason most investors significantly underperform over time is because they constantly follow their emotions, which consistently puts them in the wrong place at the wrong time.

Rather than buying low and selling high, they do the opposite.

Step three. Reduce investment costs where possible. There is so much “junk” — i.e. prepackaged financial products sold to the retail investor. These products are sold by banks, brokerages and independent financial planners. They’re pitched at really nice dinner seminars. The excessive internal costs of these products make it difficult for the investor to gain the benefit of their underlying investment. With many of these products, it can take years, if ever, to overcome the internal costs.

Step four. Be patient — and this is the most important step. Stocks, real estate and direct business investments take time to play out. If you buy a quality stock or a property today, for a decent price, odds are that 10 years from now it will be worth significantly more than it is today. It will likely be worth much more than if you had invested that same money in a conservative investment.

The downside — and the part that trips up most investors — is that the investments that go up the most typically fluctuate the most. And that instability causes investors to bail out at the worst possible time and lose money.

This is why we recommend diversifying your portfolio with some conservative, albeit relatively unexciting investments. Each of our clients has an investment portfolio built to their specific goals and individual risk comfort level. While this is not necessarily the way to maximize returns, it is the way to maximize your return. We know if we can keep you invested for the long term, we can significantly increase your odds of meeting your goals and building wealth.

The concept is simple; the execution is difficult. But that’s why we’re here. We are committed to helping you reach your goals. Please call if you need help or have any concerns.

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.

Back And Forth

Posted June 4, 2015 by paragon. tags:Tags: , , , , , ,
shutterstock_56811187picmonk

The U.S. stock market is in a rut. Since the end of last year, little progress has been made. In the last three months, it has moved back and forth in a trading range 10 times. Volatility has increased, with larger daily moves than we have seen for some time. During the month of March, major indexes closed down about 1.5 percent.

Many markets around the world hit all-time highs during the first quarter, which, depending on your perspective, has its ups and downs. For momentum or trend traders, it’s positive, because they ride the trend as long as it lasts. On the other hand, for range traders it’s negative. We are currently hitting the upper end of the range, which may mean it’s time to sell.

Last October, we had a 10 percent pullback. It is too early to tell, but so far it seems the market leadership of large cap stocks and the S&P 500 may finally be changing. Since the October correction, the S&P 500 has lost relative strength.

Contrary to what doomsayers perpetually predict, the dollar has been incredibly strong for the past nine months. So while it may be a great time to go to Europe, it’s somewhat tricky for investors. In addition to determining where to invest internationally, it is important to make sure your dollar exposure is hedged properly.

After falling from $106 to $46 in six months, oil has recently found some stability. This is in the face of analysts calling for $30 oil. Opportunities to invest seem to be spreading out from the U.S. We are entering a transition period where the markets are offering new opportunities and risks.

MANAGED INCOME

The bond market continues to be somewhat of a conundrum. We have been at all-time lows with the 10-year Treasury bond yielding around 1.85 percent. That means if you bought that bond today, you would earn 1.8 percent for the next 10 years. By way of comparison, Germany’s 10-year bond is yielding an unbelievable 0.20 percent. In fact, in a number of European countries, you would have to pay the government if you bought shorter-term debt because they have a negative yield.

The bottom line? Rates are at all-time lows around the world. And because of that, we know rates will eventually rise. When those rates rise, many investors will be hurt. If rates were to move up quickly, bond investors could potentially see volatility and losses similar to what we see in the stock market.

Investors invest in bonds rather than stocks because of their historic level of safety. And that’s a problem considering today’s market. When interest rates move back up to their historical norms, that illusion of safety could easily evaporate.

Interest rates were supposed to move up two years ago. They didn’t. The FED determined the economy was too weak. Ever since then, investors have expected rates to move up. Most recently, rates were supposed to move up this coming June.

Simply put, it’s a guessing game. There are many variables at play and no one knows when rates will rise. The problem is that we have to protect Managed Income from those eventual rate increases. Protecting the portfolio has a cost, in that we give up some of the meager returns currently available. We will continue to do our best to protect the portfolio and pull out whatever returns are available without putting the portfolio at undue risk. When we move off these all-time lows in rates, we should have better opportunities to once again capture returns in the conservative space.

TOP FLIGHT

Active management strategies are coming back into favor. This usually happens later in a market cycle — after the easy money has been made. Early in a market recovery, almost any strategy will work because almost everything is moving up. This is when everyone appears to be a genius.

Later in a recovery, as many asset classes approach full value, it is more difficult to generate returns. Typically, that is when active managers outperform. This is also about the time many investors switch from active strategies to passive ones. Historically, because of the increased market risk, that is exactly the wrong time to make the switch.

We have seen this change in opportunity within Top Flight over the past quarter. Top Flight Portfolio returned 3.98 percent net of fees for the first quarter versus 0.96 percent for the S&P 500. From its inception in January 1998 through March 2015, Top Flight has returned 615 percent to investors versus 193 percent for the S&P 500. That works out to a compound rate of return over that period of 12.08 percent compounded for Top Flight versus 6.42 percent for the S&P 500. Please click here to see full track record and disclosures.

WHAT IS AHEAD?

It’s the question I get asked repeatedly. While no one really knows, there are factors we do know. We know we are likely in the latter third of this bull market. This bull market is the fourth longest in 85 years. From a low of 6469 on March 9, 2009, the Dow Industrials has gone up an additional 11,700 points.

Other issues include:

• How does the market usually react to a severe drop in oil?

• What does the market usually do in the seventh year of a president’s term?

• How does a rapidly rising dollar affect the market?

• Stocks are overvalued by most historic metrics but undervalued relative to interest rates.

The list is endless. We do our best to separate out those factors that matter and adjust our portfolios accordingly. We apply those factors to our investment strategy to give us a framework. More importantly, we process the actual market data through our models, then react to that data as market conditions change. For example, Top Flight is currently holding about 30 percent cash, which is its highest cash allocation in some time.

Investing is difficult. As I have said before, there are 10 ways to lose money for every one way to make it. Fortunately, Nate and I have a combined market trading experience of 50 years. As they say, “This is not our first rodeo.”

Our objective is to make sure you are invested according to your risk comfort level. Each of our clients is invested differently depending on age, goals, total net worth and investment experience. In order to achieve investment success, you must be invested in a way that allows you to stay invested over the long term, through market ups and downs.

Please let us know if you would like to discuss your investments or make changes to them. We appreciate the confidence you have placed in us.

Written by Dave Young, President and Founder of Paragon Wealth Management

 

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. 

Olympic Investment Advisors

Posted August 9, 2012 by admin. tags:Tags: ,
London Olympics


Written by Dave Young, President of Paragon Wealth Management

When I think of olympians, I think of the best of the best. The best track stars, the best gymnasts, the best swimmers (Michael Phelps), etc. To become the best it takes a lot of training, dedication and motivation.

Most people don’t see what these athletes experience behind the scenes to become olympians. They only see the result of what they’ve become.

This is true with investing. To become an “olympic” investment advisor, it takes a lot of training, dedication,  motivation, and years of experience. A person can invest in the stock market on their own, but usually they won’t get the “olympic” results they are looking for unless they put in an “olympic” type of effort.

That’s why most investors who want “olympic” results hire a professional or an “olympic” advisor to manage their funds. It’s important to find someone who is capable of managing your funds to receive the best performance results. There are many advisors that you can trust and become friends with, but they may not be the best people to manage your life savings.

It is uncommon for an Registered Investment Advisor to post their performance results, especially online. There are many reasons for this, but poor performance is the primary one.

Simply posting our performance numbers is one area that sets us apart from other advisors. Posting our performance numbers “net of all fees” is another way in which we are unique. We post our portfolio performance numbers, net of all fees” on our website each month. That way an investor can see our actual net results generated on an ongoing basis.

Our performance numbers  are on our website and are updated regularly.

Next time you think about investing, and hiring an investment advisor, look at their performance record, net of all fees, to see if it is “olympic” material.

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 TOP FLIGHT PORTFOLIO INCREASED 410.7% OVER 14 YEARS

Posted March 9, 2012 by admin. tags:Tags: , ,
Park and pond



Paragon Wealth Management’s growth portfolio, Top Flight, increased 410.7 percent from January 1998 through February 2012.

“We are happy to see these numbers over a 14-year time span in our growth portfolio,” said Dave Young, president and founder of Paragon Wealth Management.

Young designed Top Flight in January 1998 to be a dynamic, overall solution for the growth portion of a portfolio. It is specifically for the growth-oriented investor.

“Top Flight’s objective is to generate superior absolute returns while attempting to protect against downside volatility,” said Young. “While we cannot guarantee Top Flight will meet this objective, we manage the portfolio with this goal in mind.”

Top Flight invests primarily in exchange-traded funds (ETFs) that cover a wide range of asset classes, which provides investors’ portfolios with focus and flexibility.

The portfolio is managed using two unique groups of quantitative models. The first group of models is proactive in nature and determines which areas to invest in. The second group is protective in nature and determines how much of the portfolio will be invested and how much will be in cash at any point in time.

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. 

Money Management and Baseball

Posted March 10, 2011 by admin. tags:Tags: , , , ,
Money and Baseball


photo by laffy4k

Written by Dave Young, President of Paragon Wealth Management

Imagine yourself as a baseball player.

First, your team gets a base hit, next you get a double. Then, another base hit. This is followed by a triple, and then you strike out. Then, you strike out twice in a row! Just about the time you are ready to abandon your team, they hit two home runs.

The moral of the story is you never know how the game is going to turn out unless you stay for the whole game. 

Asset management is similar to baseball because they both take patience and a sound long-term strategy to be successful.

At Paragon Wealth Management we have asset management services for our clients who have $200K to $1M to invest, and wealth management services for investors who have over $1M to invest. When investors see the returns our growth portfolio, Top Flight, has generated over the past 13 years, they get excited about them. Then, when the market goes through a downturn, and Top Flight goes through a mild downturn, they start questioning their investment strategies.

Paragon’s Top Flight Portfolio has generated a total return of 421.46 percent versus 72.19 percent for the S&P 500 from January 1998 through February 2011. (see www.paragonwealth.com for full track record and disclosures.)

It is important to understand the ups and downs that investors went through in order to capture those returns investors have seen since Top Flight’s inception in 1998.

Its also important to understand that investors who did not keep a long-term perspective and bailed out of their portfolios along the way, never saw those returns.

It is only those investors who had the discipline to keep a long-term perspective who got the long-term returns.

For example, in four of the past 13 years, which is about 31 percent of the time, Top Flight underperformed the S&P 500. In two of those years, Top Flight declined and investors lost money.

The investors who focused on the short-term during those times, bailed out of their portfolios. They were shaken out of their long-term investment strategy and ultimately hurt themselves by selling out of their portfolio.

In an ideal world Top Flight would always outperform and would travel a straight line of positive returns year after year. 

Unfortunately, we do not live in a perfect world. Reality is more like two steps forward and then one step back over and over…

With Top Flight we never know in advance when we are going to under perform the market or when we are going to “hit a home run.” Although there are no guarantees, we do believe that if we keep stepping up to the plate and executing our investment strategy that we are going to outperform more than we underperform. Over time we believe that disciplined execution of our investment strategy will deliver outsize results.

However, that means we have to keep stepping up to the plate, and we have to consistently follow our investment strategy.

That is how Top Flight has generated returns almost six times more than the broad market as measured by the S&P 500 over the past 13 years.

If investors want those long-term returns, then they must “stay for the whole game”. 

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 3rd Quarter 2009 Newsletter

Posted October 15, 2009 by admin. tags:Tags: , ,
Our Newsletter Cover

Paragon Wealth Management’s 3rd Quarter 2009 Newsletter is now available online. Click on the link below to download a copy.

Download ParagonNewsletter3Qtr2009

The print version will be mailed next week. If you are not on our mailing list, you can sign up on our website. Click on the link below to sign up to receive Paragon’s quarterly print newsletter.

Paragon Print Newsletter Sign Up

Newsletter Highlights:

Paragon’s growth portfolio, Top Flight, has generated a total return of 336.73% versus 33.30% for the S&P 500 since January 1, 1998 through September 30, 2009. Its compound annual return is 13.47% versus 2.49% for the S&P 500. Year-to-date, Top Flight has generated 27.65% versus 19.25% for the S&P 500.

Paragon’s conservative portfolio, Managed Income has generated a total return of 60.07% and a compound annual return of 6.12%. Year-to-date, Managed Income has generated 11.93%.

Visit our website to see our track record
for full disclosures and additional performance numbers.

“The markets are back into a positive, upward trend. All 42 of the global markets we track are above their 40-week moving average, which is very bullish.” -Dave Young, President and Founder of Paragon

The market propels upward when there is an absence of selling. This is followed by the cessation of bad news, which continues the rally as people realize the world is not going to end after all.” -Nathan White, Paragon’s Chief Investment Officer

 

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. 

Investment performance reflects time-weighted, size-weighted geometric composite returns of actual client accounts and not back tested hypothetical returns or performance. Investment returns are net of all management fees and transaction costs, and reflect the reinvestment of all dividends and distributions. The S&P Index is a market-value weighted index comprised of 500 stock selected for market size, liquidity, and industry group representation. Benchmarks are used for comparative purposes only. The Paragon Top Flight Portfolio is not designed to track the S&P Index and will have results different from the benchmark. Investments in securities involve the risk of loss.

 

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