December 20, 2007
By Jacob Hancock, Deseret News
PROVO – Dave Young hasn’t pulled a coin from thin air or yanked a rabbit out of his hat since quitting his full-stage magic show decades ago. Today, 160 wealthy clients trust Young to produce higher yields — work his magic, if you will — on their stock-market nest eggs.
Young, an ex-magician who founded Paragon Wealth Management in 1986, has managed to boost his company’s two main stock-market portfolios to chart-topping heights. His Top Flight Portfolio has churned out a return of 457 percent during its nine-year history, dwarfing the nation’s much-revered Standard & Poor’s 500, which accumulated a scrawny 86 percent return in the same time period.
Paragon’s Top Flight portfolio is racking up a 19 percent compound yearly return, while the S&P 500 has landed around the 7 percent annual mark. Even Young’s most conservative, low-risk portfolio, Managed Income, is beating its benchmark, the Lehman Bond Index by nearly double in its total compounded annual returns since its inception in 2001.
For the past 10 years, the former magician’s calculations have kept him in the nation’s top 1 percent of investment managers. The 51-year-old Provo resident guards his secrets like a clam guards a pearl, but he nearly comes undone in his struggle to explain his recipe for stock-market success.
“It’s like this,” he says emphatically, holding one arm diagonally. “You buy (stocks) here; get rid of it when it starts to curve here. Keep your eye on this area, though,” he said, pointing somewhere near his wrist. “It’ll get you if you don’t.”
When Young sits down to actually forecast the future of fickle stocks fastened to a feral market, he uses slightly more sophisticated models than his appendages. But “basically,” he said with a sigh of finality, “watch your curves; they’re your indicators.”
His oldest daughter, Shannon Golladay, 27, said his financial advice can be boiled down to the spend-less-than-you-earn tenet, but she is quick to mention that her dad is worth more than the cold financial figures he cultivates daily.
“He’s a real humble guy who’s done a lot of amazing things,” she said. “He won’t tell you this, but he’s raised hundreds of thousands for scholarships, given money to friends and family, and this year the company is giving money to help a (local) boy get brain surgery.”
Golladay, who works in her dad’s plush office, also said her father supports an orphanage in Uganda, Africa.
When later approached about the Uganda project, Young squirmed in embarrassment. “The thing is, money just goes so far there,” he said. “For about the price of a house here, you can make a huge difference there.”
Before conquering the world of Wall Street and years before supporting charity endeavors, the then-27-year-old magician struggled with lining up his priorities.
The moment his child was born, working with his female assistants on a stage of smoke and mirrors slid quickly down his list of priorities. When she turned 1, his magic tours disappeared.
Once, after a two-month road trip, Young slipped home one evening in 1981 just in time for his year-old daughter’s first birthday party. Instead of his daughter welcoming him with a hug, she stared coldly at “the stranger.”
“My daughter didn’t even know who I was when I came back,” Young said, looking at his office floor with a faint squint.
He shook his head. “She wouldn’t even come to me.”
He quit touring full time immediately and went to work building auto-painting and interior-design franchises in a variety of states. One of his businesses in Reno, Nev., ran so inefficiently, he said, that he could “hear a great big cash-sucking sound every time I thought about it.”
Eventually, he turned the money pit into a cash cow, sold it, played golf and hung out for a full year. “I made a decent chunk of money selling the centers,” he said.
He turned to the stock market but wasn’t impressed with portfolio managers who passively “rode out the lows” between market upswings. He joined the market anyway but managed his own portfolio manually, calculating stock averages on his 1980s computer.
A few of his younger friends hopped aboard, but it was their parents who made up the majority of his small, grassroots investment group. Friday morning, Oct. 16, 1987, Young and his clique of investors were fully invested. By that afternoon, Young completely cashed out of every stock of his investors because of a tiny but ominous-looking prospect he discovered in his finely tuned calculations.
He forgot about it and took off for a brisk October hunt.
His suspected prophecy of doom turned reality 60 hours later on Oct. 19 when the stock plunged to such a devastating low that the day was dubbed Black Monday.
“I got back and saw that my answering machine was just completely loaded with frantic messages,” he said. “Oh, they were upset, saying things like, ‘That’s my whole retirement!’ and, ‘What am I going to do?”‘
Young’s cash-out decision spared their portfolios from a 22 percent nose dive and boosted his image to attract more serious and affluent clients.
Today, with a $200,000 minimum investment rule and an average account size of $600,000 for his 160 clients, he delicately baby-sits about $100 million regularly and advises outside entities on an additional $200 million.
He tends the money from a sort of master control. He’ll casually tell you it’s just a desk. He doesn’t see the eccentricity of surrounding himself with a system of three wide-screen monitors iridescently gleaming with real-time moving graphs of the national and international markets, no doubt triggering sirens at the slightest downturn.
“It’s like a game of chess,” he said. “OK, like a challenging game of chess,” he corrected.
He doesn’t mind a challenge; he traveled halfway around the world to find new ones.
“Now, hunting a leopard, that’s tough,” said Young, an avid big-game hunter who has hunted leopards in Zimbabwe. “They’re like a mountain lion on steroids.” Shooting the leopard, he said, “was one trick I won’t forget.”
And that’s saying something for a fellow who’s been pulling off tricks since he, as a 12-year-old, received his first magic kit in the mail from a Trix cereal promotion. Since then, he’s yanked rabbits out of his hat, launched and sold profitable businesses, defeated the stock market and raised five children with his wife. And, he says, “It just keeps getting better.”