Tag Archives: investment strategies

Market Summary

Posted April 13, 2018 by paragon. tags:Tags: , , , , , ,
Changes Ahead_opt

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

The markets have been strong the past few years — and they have been exceptionally strong since Donald Trump was elected. Most of the strength was based on investor expectations. Specifically, that Trump’s free market policies and tax reform would benefit stock prices. As a result, last year the markets were up 10 to 20 percent depending on the market. Volatility was almost nonexistent.

The broad market hit a peak on Jan. 26, 2018. Since then, volatility has picked up significantly and the market has been acting more like its old self. Three issues are currently pushing it around.

First, valuations have been at the upper end of fair value for some time. Whenever valuations get this high, investors start looking for reasons to sell rather than buy. They tend to look at everything through a negative lens.

Second, Trump has been pushing a protectionist trade agenda and recently announced tariffs against China. Investors do not like tariffs. Throughout history, tariffs have always caused more harm than good. Every time tariff news comes out, the market sells off.

Third, tech stocks (specifically the FANG stocks, i.e. Facebook, Apple, Netflix, Google and Amazon) have been leading the market up for the last 18 months. But recently, they have had more than their share of bad news, which is causing them to put a downward pressure on the market.

Overall, excellent market fundamentals are still in place, which forces us to stay invested. However, with interest rates slowly rising, we are on “high alert” more than we have been in some time.

CHANGES AT PARAGON

If When I founded Paragon 32 years ago, it was because I couldn’t find a fiduciary firm that managed my money the way I wanted.

I had sold several businesses and needed a place to invest my hard-earned money. I met with Shearson Lehman, Smith Barney, Merrill Lynch and Northwestern Mutual, to name just a few. None fit the bill.

I wanted them to invest my money as if it were their own. I wanted to cut unnecessary investment costs wherever possible. I wanted a proactive investment manager who would adjust my account depending on whether the markets were going up, down, or sideways. I didn’t want them to passively buy an investment, hold it forever, and pray it worked out.

When I started Paragon, I was trading through Fidelity Investments. Each of my clients had to sign a limited power of attorney so I could trade their accounts. We called in our trades on land phone lines, one by one, because there was no internet.

After a few years, Charles Schwab became the leader in the newly developed RIA industry. They were at the cutting edge. We moved from Fidelity to Charles Schwab, because Schwab allowed us to provide the best technology and lowest costs to our clients.

We have been at Charles Schwab for almost 25 years and have enjoyed that working relationship. However, after an in-depth review, it is time for a change. Looking to the future, we believe making some significant changes will provide our clients with a better technology platform, lower transaction costs and outstanding client service.

We did not make this decision lightly. Moving 330+ accounts and upgrading multiple technology platforms is not my idea of a good time.

But change is always painful … in the short term. We are doing this because it will allow us to better serve you and provide you with the best technology available to trade and monitor your accounts.

TD AMERITRADE

TD Ameritrade is at the forefront of technology in the Registered Investment Advisor space. TD Ameritrade is a leader in trade execution. We have negotiated trade pricing that is either the same or one-fourth the cost of what we were paying, depending on the account. Better trade execution and lower costs ultimately lead to better investment results.

Safety and security of the accounts is of the utmost importance. TD Ameritrade is committed to delivering one of the highest levels of security in the industry and carries FDIC, SIPC and additional insurance against fraud up to $152 million per client.

ORION

In conjunction with moving to TD Ameritrade, we will also be implementing a new portfolio administration package from the industry leader, Orion. The Orion platform will cost Paragon five times more annually than our current provider, but that cost will not be passed on to our clients. Your costs will go down while ours go up. We believe you are worth it.

In addition to enhanced trade order management, cost basis, tax reporting, compliance, and RMD distributions, this state-of-the-art Orion platform will provide you with an incredible array of tools.

Each client will have an online portal, which will provide them with immediate access to accounts and performance across multiple timeframes. We will build these reports for you, as simple or as complicated as you desire. We will use an aggregator, which will allow you to view any of your bank accounts, or other financial accounts that are outside of Paragon. You will have immediate access to your accounts and a variety of reports via your smartphone, computer or through the mail — whichever you prefer.

EVEN MORE…

In an effort to provide you with the best client service, we will also be upgrading our client contact software. This industry-leading client software, known as “Wealthbox,” will allow our staff to take your already excellent service experience to the next level.

Finally, we are significantly upgrading our Financial Planning Software. The state-of-the-art software will make it easier to build and update your plan online. Your plans will be updated daily since they pull in the data data directly from your investment accounts. They will also be available online through your portal. Whether it is a Retirement Income plan, a tax estimate, a Roth Conversion, or Social Security Optimization, our hope is to make it easy for you to understand your plan, access it and update it as needed.

Our ultimate goal is to provide you with the VERY BEST in the Investment Advisor space. We are excited with these enhancements, and over the coming months, we will reach out to you as we get everything put in place.

Disclaimer: 1. Investment performance reflects time-weighted, size-weighted geometric composite returns of actual client accounts. 2. Investment returns are net of all management fees and transaction costs, and reflect the reinvestment of all dividends and distributions.  3. The S&P Index is a market-value weighted index comprised of 500 stocks selected for market size, liquidity, and industry group representation The Barclays Aggregate Bond Index is a benchmark index made up of the Barclays Government/Corporate Bond Index.  4. 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. The Paragon Managed Income Portfolio is not designed to track the Barclays Bond Aggregate Index. 5. Past performance is no guarantee of future results. Investments in securities involve the risk of loss. 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 To Normal?

Posted April 11, 2018 by paragon. tags:Tags: , , , ,
Screen Shot 2018-04-09 at 4_opt

Written by Nathan White, Chief Investment Officer

After a tremendous start in January (and what seemed like a continuation of 2017), the markets finally hit some long-anticipated turbulence in February and March.

The stock market had been riding a nice wave. Last quarter, I suggested it was a prudent time to review allocations and risk exposure while the markets were doing well. Now that volatility has returned, let’s review current conditions and factors, as well as future considerations.

The current economic conditions are generally considered to be exemplary of the late stage of an economic cycle. However, cycles can run longer than anticipated, and there is no way to know exactly when they will end. The effects of the fiscal stimulus are helping to extend the economic cycle, but they could also increase the potential for inflation to finally rear its head. A characteristic of a late economic cycle is where the economy continues to do well, but asset price declines or increases only moderately.

A research report from NDR (Ned Davis Research, Economics/Global Comment March 2018) indicates that two-thirds of countries are growing above their long-term growth potential, which last happened in 2000 and 2007 before major recessions. However, the dangerous threshold could still be a year or so out, and the timing can be tricky. Does this mean we are bearish? No. We are just getting cautious. There are still a lot of positives, but it is our job to investigate the risks.

Our risk models are indicating a rise in risk. Our trend and breadth models, while still bullish overall, have deteriorated. We are monitoring these closely. Equity valuations are still broadly high, but earnings are forecasted to grow nearly 20% for the year. We will be watching for changes to these results and expectations. Another characteristic of a late economic cycle is a flattening yield curve. This occurs when short-term rates exceed long-term rates. The curve has been flattening as the Federal Reserve increases interest rates, but for various reasons, long-term yields have not moved commensurately. The following graphic on the next page helps put the current environment in perspective.

Investing is a long-term game, and trying to time exits can be hazardous to returns — especially if future returns are harder to come by (i.e. lower). You will need to keep exposure to get returns. Stay invested — but be flexible in the mix of those investments.

Remember, pullbacks are a normal part of market action and create opportunities. What is not normal is the absence of pullbacks (like we experienced in 2017). The trillions of dollars — pumped into the markets by global central banks since the Financial Crisis — has smoothed out volatility and market corrections. The latter should increase as central banks begin to reverse course. Keeping interest rates so low for so long has encouraged massive borrowing at cheap rates. Corporate borrowing has surged with U.S. companies’ debt reaching their highest levels since 2000. Many companies have been able to borrow at rates and amounts that wouldn’t

have been possible in a “normal” rate environment. As rates rise, the cost of servicing this debt will increase and could expose many weak hands. This is healthy in the long-term, though, as it discourages wasteful or inefficient use of precious resources. The real question is that as credit conditions normalize, what will be the effects on markets and the economy? I believe current market conditions to be exemplary of returning to a more normal environment.

STRATEGY REVIEW

The S&P 500 ended down for the quarter, and only two of 11 S&P 500 sectors posted gains and outperformed — Technology and Consumer Discretionary. Bonds were also down for the quarter as they face an uphill battle of rising interest rates. Within TopFlight, all three of the strategies (Fundamental, Momentum, and Seasonality) were up slightly for the quarter. Some of the best performers within our Momentum strategy were Nvidia, NetApp and Micron Technology. Our small cap momentum stocks generally lagged in the first quarter but closed the gap by quite a bit in March. Within our Fundamental stocks, the best performers were Northrup Grumman, Ruths Hospitality and Eastman Chemical. After a difficult 2017, our Seasonality strategy posted a gain for the quarter as well. We continue to like the valuation position of our current stock holdings. Their collective forward P/E (price/earnings) multiple is about 14.8 versus 17.4 for the S&P 500, which is about 15% less expensive. Many of these holdings are industrial and materials companies that could benefit more from the tax cuts and possible infrastructure spending.

Our Managed Income portfolio ended the quarter slightly down, primarily due to the slide in equities. We continue to maintain about 40% of the portfolio in short-term corporate bonds, which will allow us to capture the rise in interest rates without getting hit with significant capital losses. Another 15% of the portfolio is in intermediate Treasuries. We continue to avoid long-term bonds.

Going forward, our models still indicate a reasonable case for further stock market gains, but probably not on the level of past years. Inflation trends are still positive for now, and the strong economy and earnings growth outweigh the concerns I discussed earlier. But as the risks increase and the economic cycle matures, it is important to have a more flexible approach with your investments to control risks and take advantage of opportunities. This is exactly the way we like to manage investments.

If you have questions about your allocation and risk exposure, please give us a call. We are here and happy to help.

Disclaimer: 1. Investment performance reflects time-weighted, size-weighted geometric composite returns of actual client accounts. 2. Investment returns are net of all management fees and transaction costs, and reflect the reinvestment of all dividends and distributions.  3. The S&P Index is a market-value weighted index comprised of 500 stocks selected for market size, liquidity, and industry group representation The Barclays Aggregate Bond Index is a benchmark index made up of the Barclays Government/Corporate Bond Index.  4. 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. The Paragon Managed Income Portfolio is not designed to track the Barclays Bond Aggregate Index. 5. Past performance is no guarantee of future results. Investments in securities involve the risk of loss. 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.

Put The Odds In Your Favor

Posted November 4, 2015 by paragon. tags:Tags: , ,
Stock Market Graph

Written by Nate White, Chief Investment Officer of Paragon Wealth Management

This article is from Paragon’s Third Quarter Newsletter. If you are interested in receiving a free printed copy of Paragon’s Quarterly Newsletter, please click here.

Investing encompasses two of the most powerful human emotions — fear and greed. In light of the recent market volatility, your biggest fear, without a doubt, is losing money. No one likes to see account values go down. So how much should you worry about losing money with your investments? And how valid is that fear when viewed through a historical lens?

We all know investing is a long-term process. I would take that one step further and propose that the main risk is not being invested. And history proves it.

Fear of the downside prevents people from investing correctly. When markets become volatile or economic fear increases, the apprehension is over values dropping in the present moment. Often the fear is that the values will drop and never come back. No one ever wants to see their accounts drop by 20 or 50 percent — and then never recover. But when in the history of the markets have they ever not come back? Never. Even still, it is amazing to hear this irrational concern over and over and over again.

When markets drop, many people sell out or change to a more conservative allocation, thereby effectively locking in their losses. When someone sells out as the market is going down, they rarely get back in at a lower price. If you sell out when the market is down 5 or 10 percent, when do you intend to get back in? When the market is down 15 to 20 percent? Usually the fears that cause someone to sell do not subside before the market rebounds (and it often become worse). By the time the waters have calmed and the investor’s confidence has returned, the market has moved higher than the point from which they sold.

In fact, if someone doesn’t recover from a market downturn, it is usually because their allocation was overly risky going into the downturn or they changed to a conservative allocation during the slide. It’s not because the markets didn’t recover. For example, if you were overloaded on tech stocks or financials before their respective crashes in the previous decade, you probably had a hard time recovering. People tend to load up on the “hot” things during boom times only to get sorely disappointed when those assets come back down to earth.

Now back to my claim that the real risk is in not being invested. Long-term risks are always harder to confront rationally because they are not immediate concerns. In order to help overcome the fear of the market’s downside, please consider the accompanying table. It displays the historical probabilities of a profit in various timeframes for stocks (S&P 500), 10-year Treasury bonds and a mix of 20% stocks and 80% bonds from 1928 through 2014. The stock market’s chances of being up in a single year have been over 70% — and it only gets better the longer you hold. There has never been a 20-year (and nearly a 15-year) period where stocks have been down. Most people entering retirement today have more than 20 years of “investable” time. Now, I’m not recommending a 100% stocks portfolio for retirees, but the principle remains strong.

For those who are more risk averse or require a more stable portfolio, look at the figures in the 20/80 mix of stocks and bonds. It is better than even a portfolio of pure Treasury bonds in that it has had a better average annual return (6.3% vs. 5.0%) for the same amount of downside risk. This portfolio had only two negative three-year periods out of 85 occurrences and has never had a negative five-year period. Talk about putting the odds in your favor!

Not one of us has control over the market, but we do have control over letting time work in our favor. This table shows that negative periods are in such an impressive minority that they should be looked upon as opportunities — or at least ignored from an investing standpoint. Not many people wanted to invest during the 2008-2009 financial crisis — and I get it. The headlines were scary and it seemed as though the economy might collapse. But in hindsight, it was a great buying opportunity very few took advantage of.

There will always be things to worry about — and today is no exception. Consider that the period covered in the above review included the worst World War ever, a Great Depression and 12 recessions, the Cold War, numerous other wars and conflicts, oil shocks, inflation shocks, strong and weak dollar periods, debt bubbles, fiscal crises, various housing booms and busts, technology booms and busts, and both Republicans and Democrats. Despite all these hazards, the markets have moved up, reflecting the virtues of a free market and providing an effective method for investors to build their wealth. Don’t be left out!

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.

 

Seven Reasons Why Investing is so Tough

Posted February 17, 2011 by admin. tags:Tags: , , ,
American Stock Exchange photo


Written by Dave Young, President of Paragon Wealth Management

Successful investing is tough. Over the long term, it may be one of the toughest tasks you take on. It’s not about your physical toughness. According to a story in USA Today, 60 percent of retired NBA players are broke within five years. The NFL is worse — 78 percent of retired players are in the poorhouse just two years after retirement.

Athletes aren’t the only ones with money issues. The problem seems to show up anytime people come into large sums of money without prior investment experience.

Studies show that the majority of widows who receive life insurance proceed to lose the money within three years. Lottery winners carry the same characteristic with most losing their winnings within a few years. Because of difficult markets and poor investment strategies, over the last 10 years, many retirees have lost more than half of their retirement savings.

Why is investing so tough? Here are seven reasons:

IT REALLY IS THAT DIFFICULT
Certain types of investing can be almost impossible. Regardless of what the infomercials promise, a small percentage of options, futures or currency traders actually succeed. While the potential is there, the odds of success are totally stacked against you.

SCAMS
Invest in real estate, business or stock scams and you will have no chance of getting your money back. They seem like a great idea at the time, but without experience, scams are difficult to identify.

IT’S OUT OF YOUR CONTROL
Legitimate real estate or business projects can go sour because of a bad market, poor management, competitive factors or other issues beyond your control.

DIFFICULT MARKETS
If you invested at the peak of a stock or real estate bubble, like 1999 or 2007, you are still waiting for your account to get back to even. Unfortunately, markets are always difficult. No one rings a bell when to buy or sell. Human nature drives most investors to buy when prices re high and sell when they are low.

LOW-PAYING GUARANTEED PRODUCTS
Bank CDs, savings accounts and annuities induce buyers by promises of safety and security. The only real guarantee is that your returns will be so low you’re guaranteed your earnings will not keep up with inflation and taxes, ultimately destroying your purchasing power.

BAD ADVICE
Unfortunately, many “advisers” know little more than the people they are advising.

BAD PRODUCTS
A lot of investment products sold by salespeople are not good for investors. Many are expensive and full of hidden costs. Some even limit your upside. Often, they are structured to benefit the company selling them.

So what should an investor do? First, embrace the fact that investing is difficult. Take is seriously. Recognize little is taught about investing in our educational system. Be realistic about your level of investment proficiency. Understand taking it lightly can be hazardous to your financial future.

Second, educate yourself about investing. Learn the basics. This does take time. Realize many investment theories contradict each other. The more you read, the more you realize how much more there is to know.

Third, find an adviser you can really trust. If you really don’t have time, resources or expertise to manage your own money, then work with an exceptional adviser. At a minimum, you want someone who is a fiduciary, who has at least 10 years of experience and who can show you their actual 10-year track record.

On our website, paragonwealth.com, we provide a free, educational download titled, “How to Select a Financial Adviser.” I highly recommend you download and use it as a reference.

The bottom line is successful investing really is tough. It is competitive. To succeed requires knowledge, experience, mental toughness and discipline.

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Any information presented is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Investments in securities involve the risk of loss. Past performance is no guarantee of future results. All opinions and estimates constitute the judgement as of the dates indicated and are subject to change without notice. Do not rely upon this information to predict future investment performance or market conditions. This information is not a substitute for consultation with a competent financial, legal, or tax adviser and should only be used in conjunction with his/her advice.

Letter to Obama– How to Create Jobs

Posted December 9, 2009 by admin. tags:Tags: , , ,
Obama


photo by mrsrichardson823

A couple days ago I heard President Obama say that he wanted input on how to create more jobs. Here is my input.

I’ve mentioned in previous posts that I do my best to look at things from a neutral perspective. I really don’t care who is in charge as long as they do not complicate my wealth management practice too much.

The Obama administration has made that difficult.

Dear Obama,

In my past 23 years of money management, politicians haven’t had much effect on our investment strategies. As a general rule, the less they do, the better the free market functions and that is usually positive for the stock market.

On the other hand, the more they do, the worse the free market functions, and that is usually negative for the market. The offset this time is that the stock markets were so extraordinarily undervalued that they really had nowhere to go but up.

Now that unemployment has skyrocketed, our politicians have decided that jobs are important.

Unfortunately, they did not decide that before they allocated $787 billion towards their “stimulus” program that we bought for them earlier this year.

Last week they held a job summit, also know as a “PR stunt”, to show how much they care about jobs. Then on Tuesday, five days later, they announced their plans to “save and create” more jobs. It’s amazing to me that you can go from the information gathering summit stage to the implementation stage in five days. Aside from that anomaly, let me explain.

Businesses create jobs. Politicians do not.

On a national level, some studies claim that it cost the government, which is code for the taxpayers (since the government does not actually have any money), $242,000 for each job they created with their stimulus bill. In Utah County, they claim it cost $147,000 for each job created by bill. Contrast that with business that spends nothing to create a job. In business a job is created when it adds value to and helps a company make more money. Any way you cut it, it is silly for government to spend billions of our money artificially creating temporary jobs.

So what can government do to help create jobs?

It is simple. First, create an environment where business can prosper. Second, let businesses keep more of the money they earn so they can use it to expand and hire additional employees.

The pot of money that businesses have to work with is limited in size. So when government takes the business owner’s money for extended unemployment coverage, which originally started at 16 weeks, and is now up to 99 weeks. Then you asses them with workman’s comp, social security and then another 40% cut of their income for state and federal taxes. It does not leave a lot to work with.

But, that is not enough. Then you propose punitive taxes on “the rich” ie. business owners (since they do not pay their fair share) followed by additional significant taxes on business for health care and cap and trade.

Since they do not have unlimited resources (like the government thinks they do) businesses cut back on hiring. Because they are afraid they are going to be taxed into oblivion and there is no real benefit for them to take risks (since they do not get to keep the money they earn) they stop expanding.

It really is simple. Get government out of the way of the free market. Reduce the ineffective and burdensome regulatory bureaucracy. Provide an infrastructure that allow businesses to prosper. Let businesses keep what they earn.

This is basic economics and a lot more effective than spending $242,000 to create a $45,000 temporary job. This is the way to see employment expand and create millions of jobs. Just like it did throughout the 80’s and 90’s.

Sincerely,

David Young
President of Paragon Wealth Management

What do you think? Feel free to leave comments.

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.

Staying Focused

Posted July 1, 2009 by admin. tags:Tags: , ,
Calm Beach

Written by Nathan White, Chief Investment Officer


photo by Rene Ehrhardt

Right now our investment models are favoring areas such as emerging markets and resource-based sectors. Emerging markets are showing good relative strength and are improving based upon confidence that the global economic situation is improving.

Areas such as Brazil and China are benefiting from the commodity demand theme as their middle classes continue to grow. These areas were also less exposed to the credit crisis.

Improving economic prospects along with the increased global demand for commodities directly benefits resource-based sectors of the economy. We have been allocating towards these areas, and now that we are in the summer doldrums we will look for further opportunities to average into these areas on any pullbacks.

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.

Don’t Listen to Market Forecasts

Posted February 4, 2009 by admin. tags:Tags: , , ,
Stock Market Forecasts

Written by Dave Young, President


photo by nieve44/laluz

At the beginning of the year, most investors are interested to hear a market forecast or a prediction of how the stock market will be throughout the year. The truth is no one can predict the future for the stock market or anything else and be absolutely 100% sure it will turn out that way.

There is no shortage of self-proclaimed market prophets. You can find them in investment magazines, newspapers or CNBC. Although they can be entertaining, they provide no real investment value. They do not help anyone make money. In fact, investors who follow them are more likely to lose money than to gain it.

The way the forecasting game works is that the market guru, seer, pundit or executive continually makes forecasts in an attempt to gain public attention. By sheer luck maybe half of these predictions are proven right-meaning that at least half of them are wrong. On the occasions when the forecast turns out to be correct, the forecaster plays it up.

Those many forecasts that don’t pan out (and those many investors who are financially hurt by them) are never spoken of again.

In truth, you’re more likely to get an accurate prediction of the future by listening to the weather forecasters. At least they inflict less damage when they’re wrong.

Yet despite mountains of data that show how ineffective the celebrity market forecasters are, they continue to make their predictions and many unfortunate people continue to base their financial decisions on shoddy, unproven advice.

Market professionals are not alone in their inability to forecast market behavior. Economists do just as poorly. Every six months the Wall Street Journal prints the results of a survey of leading economists who predict the level and direction of interest rates for the coming six months. 55 high profile economists currently participate in this semiannual forecast.

You’d think such prestigious economists in such a high profile newspaper would know what they’re talking about, right? Nope.

If they’d just blindly guessed they’d have a 50/50 chance, but their actual educated predictions turn out to be much worse. And these are the best the industry has to offer!

So if forecasts are a waste of time, then what does work?

I am convinced that investors will only succeed when they are able to remove emotion from the investment process. Gut feelings are not a reliable investment strategy– even the gut feelings of so-called experts.

Oftentimes, successful investing requires you to act in a way that is contrary to what you “feel” is right. For example, several of our models measure the overall optimism or pessimism in the investing public. When optimism is high we know that there’s a lot of risk in the market, and it’s likely that the market will decline. Likewise, when optimism is low and most investors think that things are really bad, that is usually a great time to invest. This pattern has repeated itself for years.

We take great care to ensure that all of our investment decisions are based on solid, proven models, not hunches. Our portfolio allocation models tell us how much we should be invested based on measured risk in the market. We run the models daily to determine the most effective percentages of investments and cash holdings.

Once we’re in the market, our portfolio focus models tell us where we should be invested. We constantly track all areas of the equity markets on both a macro scale (small cap, mild cap, large cap, value, growth, international and emerging markets) and a micro scale (individual industries, sectors and countries).

The bottom line for Paragon Wealth Management’s clients is that they can be confident that their portfolio isn’t being managed by some celebrity market fortune teller. Our quantitative models enable us to impartially measure what is actually happening in the market and how much risk there is at any point in time. We constantly evaluate the models to determine how effectively they are working. In my opinion, this is one of the best ways to invest for long term success.

To learn more about our investment strategies at Paragon Wealth Management, visit www.paragonwealth.com or call 801-375-2500.

Investment Strategies for this Rocky Market

Posted September 17, 2008 by admin. tags:Tags: , ,
The New York Stock Exchange

 

 


photo by Jaap Steinvoorte

Written by Nathan White, CFA

We are finally starting to see some true fear in the markets.

The VIX index, which measures market volatility, is above 30. Once this “Fear Index” gets into this territory, it indicates that market participants are getting taken out whether they like it or not. These reading have the tendency to shake out the last of the sellers.

The hard part is that the indicator can get worse sometimes before it gets better, and it takes a lot of nerve to buy when the market is acting so badly.

So although this can be a good time to buy for the long-term, the problem is that you must stay solvent during the short term in order to take advantage of it. That means being able to withstand some seriously negative days on the market.

Another investment strategy is to wait out the market volatility and not buy during the downdrafts but instead wait for a broad based rally that comes after the market has hit what looks like a bottom. This strategy can have less risk if the rally is broad based. The cost of the strategy is that you did not buy in a at market lows and if the rally is not broad based you might be buying in just as the market is getting ready to roll over again.

Another quick note…

The government has done a masterful job of delaying the pain of a bear market with the bailouts. Why don’t they just get out of the way and let the market do its thing? We might have more short term pain, but then it would be done! Pull the sliver out and let’s heal!

Every time the government bails out somebody it comes at the cost of long–term prosperity.

There is a consequence for every action and the more obligations the government assumes will reduce the upside potential of a recovery and our future standard of living.

Stay tuned…

Paragon Wealth Management is a provider of managed portfolios for individuals and institutions. Although the information included in this article has been obtained from sources Paragon believes to be reliable, we do not guarantee its accuracy. All opinions and estimates included in this article 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.

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