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Press Room
It's Time to Enjoy Your Retirement
If you are retired, it is important to stay focused on the purpose of retirement. What is your goal? Retirement should be a time that is enjoyable and relatively stress free. You should be able to spend your time doing the things you have always wanted to do such as travel, provide service, and enjoy relationships with those close to you.
Savers Beware
Bond market yields are lower now than when the government was running a surplus a decade ago. Something is wrong with this picture. If you didn't know otherwise, the low yields might lead you to believe that our national debt is low and sustainable. Further, just looking at the current yields, you might think that our future budgetary concerns have been resolved due to significant entitlement reform.
There's no Such Thing as a Sure Thing...
Throughout my years in the investment management business I have witnessed how both fear and greed affect investors’ decision making. As markets approach the pre-financial crash levels it is probably an appropriate time to assess how emotions impact investing. Investing is basically a set of trade-offs and I believe that many investing mistakes occur in the attempt to ignore this reality
Markets Keeps Moving Up
Markets moved upward in January and February in a continuation of the positive trend of the last quarter of 2010. Even with all the fear and uncertainty about the future, corporate profits have been very solid. Since earnings drive stock growth - and stocks were undervalued - the market continued to push upward. While there are a lot of varying opinions on just how strong the global recovery will be, there seems to be a consensus that we should see solid growth in the near term.
Another Step Forward
Along with a lot of volatility and drama, 2010 brought us another positive year in the market. After selling off during February, the market surprised most investors and reversed and rallied hard through mid April. At this point investors moved from fear to greed with most becoming very optimistic. Their optimism was dashed by five months of back and forth volatility. European markets were in turmoil with Portugal, Ireland, Greece and Spain leading the way down.
Tempered Bull?
Although we cannot predict the future or know where the markets will ultimately end up, we constantly monitor the current environment to obtain clues as to how the year might pan out. At Paragon we believe in staying flexible rather than applying a static asset allocation that just needs rebalancing. In our view right now, there are more positive factors supporting a continued advance in the equity markets than there are risks to downside.
Fighting the Last War
It has definitely been a choppy year for the markets, but as we enter the fourth quarter, there are some signs that the market can end the year on a good note. In January, our best guess at how the year would turn out was that the equity markets would end positive for the year, but it would be a bumpy ride. We warned that this type of environment could easily knock investors off their footing in light of the market crash in 2008 and early 2009. Anyone who sold during the January or summer corrections missed out on the subsequent rallies.
A Seesaw Quarter
This seesaw market has been very confusing for most investors.On Main Street, there has been an overwhelming negative sentiment, but on Wall Street, corporate profits are exceptional, and the Dow has rallied from 6500 to 11000. Why the contrast? Main Street is bombarded by the media negative spin day after day. Politicians on both sides try to gain advantage by further exacerbating the negative. Some TV talking heads take it to a whole new level of gloom by pushing their own version of impending world doom.
Extreme Fear and Greed in the Stock Market
The S&P 500 is down about 6.66 percent year-to-date. From its peak in April, it has dropped a total of 14.5 percent from peak to trough. Our conservative portfolio, Managed Income, has done well despite the difficult market. It s still up 0.48 percent year-to-date. Our growth portfolio, Top Flight, has done relatively well. It is down only 7.74 percent for the same period. At the end of the quarter, our investment models put Top Flight 20 percent in cash and 80 percent invested.
Continued Recovery or Double Dip Recession?
During the second year of an economic recovery, the economic data tends to level off compared to the higher growth rates in the first year of the rebound. The economic data in the first year of a recovery is strong because companies ramp up production to refill depleted inventory levels, and economic activity in general resumes. As the growth rates come down in the second year, it often coincides with the stock market taking a break as well.