Tag Archives: investors

2015 1st Quarter Newsletter

Posted April 21, 2015 by paragon. tags:Tags: , , , , ,
Decisions Drive Destiny, Paragon Newsletter 1Q

Investing Evolved

A dynamic and proactive way to invest.

BACK AND FORTH 

by Dave Young, President

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-timehighs 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 see full track record and disclosures on page 7.

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.

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.

Why use Exchange-Traded Funds (ETFs)?

Posted November 17, 2011 by admin. tags:Tags: , , , ,

Watch this short video to learn more about exchanged-traded funds. Dave Young, Paragon's President, and Nathan White, Paragon's Chief Investment Officer, discussed why they like to use them, why they are popular, the benefits of using them, and the problems with using them. They also cautioned investors when using them.

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 Advice on Bonds

Posted October 27, 2011 by admin. tags:Tags: , , , ,

Luke Tait and Dave Young from Paragon Wealth Management discussed bonds in this short video. Watch the video to listen to their advice and learn what you should do as an investor. 

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.

Whither the Europeans…

Posted August 19, 2011 by admin. tags:Tags: , , , , ,
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photo by lyng883

Written by Nathan White, Paragon’s Chief Investment Officer

During the financial crisis of 2008 to 2009, there were many Europeans who scoffed at our troubles and blamed us for dragging them down. How irresponsible we Americans were was the general tone. Oh the irony.

How’s that Greek investment feeling right now?

It felt good to get that off my chest…

With the markets continuing its record moves and volatility and testing the recent lows, what is next? In the short-term, the market is extremely oversold and sentiment is extremely negative. It can be very hazardous to sell into this condition. The bad news is that Europe is reeling and their banking system is under extreme strain. Their recent futile efforts such as banning all short selling and the proposal of financial transactions tax are extremely counterproductive. Their fractured political system makes it hard to organize a bailout like the U.S. engineered three years ago. At some point they will organize a bailout, but the questions is a matter of timing. Will it come after bank failures occur or before?

In the meantime the uncertainty is hammering the market and affecting the real economy.

It is normal at this stage of the economic cycle for growth to slow down after business catch up to a more “normal” level. The slowing economic data was exacerbated to the downside by the Japanese earthquake ramifications and then unfortunately coincided with the debt-deal circus in Washington. Now the great debate is whether all these developments are going to cause to a double-dip recession. Some leading indicators are telling as much and indeed the effects of the current events are going to have an economic impacts as they are somewhat self-fulfilling. However, whether we have another recession or not is a moot point with regards to the market as much of it has been priced in.

Washington is still MIA and the Fed seems to be out of bullets.

However, don’t count the Fed out as Bernake is not called “Helicopter Ben” for nothing and they could pull out new versions of QE3. Bailouts always help in the short-term, but retard the upside. If the Fed keeps expanding its balance sheet at some point in time it will have to be reversed and that is the risk I fear in the future. I wish the Fed would have been selling all their bonds into this recent rally for a tremendous profit!

In the background of all this is that corporate profits have been tremendous supporting a low valuation argument and corporate balance sheets are generally strong and flush with cash. If a recession ensues they are much better prepared than three years ago (including the banks).

No one stopped buying iPhones during the last recession.

Survival is a powerful instinct and as we enter an election year, policy makers could come to their senses and realize they need some “real” policies that encourage economic activity or they are history (note to President Obama – extending unemployment is not one of them).

In the short-term, and until we get some kind of clarity/resolution regarding the European debacle, it is going to be a tough and volatile environment. The up side risk is that if at any time we get some resolution of the Euro situation stocks are extremely undervalued and could rebound so fast that sellers would be left holding the bag.

In this environment, we are cautiously looking at the areas such as energy and materials that get beat up the most and then offer the best upside while at the same time holding some cash for a bit of protection and future opportunities. In both of our portfolios, we have raised just shy of 20 percent cash and as a precautionary move. We have moved out of all traditional money markets into U.S. Government money funds (or FDIC Bank- sweep features) in order to avoid the negative effects should the European banking system freeze up.

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.

Downgraded…

Posted August 8, 2011 by admin. tags:Tags: , , , , ,
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Written by Dave Young, President of Paragon Wealth Management

Over the past couple of weeks we’ve seen extreme volatility in the financial markets.

The volatility started with political drama over the debt ceiling, which initially created uncertainty for investors. After a high drama last minute agreement, which apparently didn’t solve anything, the markets sold off hard. Uncertainty in Europe exacerbated the situation.

It looked like we might have put in a market bottom last Friday with the selling reversing midday. Then, Friday evening we found out that the S&P Bond Rating Agency had lowered their rating on U.S. Treasury Bonds to AA+ from AAA.

Their timing couldn’t have been worse. 

I knew we were in for a ride, but wasn’t sure how much of one. U.S. Treasury Bonds have held a AAA rating ever since the rating agencies were created and started rating bonds. United States Treasury Bonds have always been considered the icon of safety and security. Their yield has always been always been characterized as the risk free rate of return. Historically, no security has been considered safer than a U.S. Treasury Bond.

Downgrading U.S. Treasury Bonds takes us into unknown territory. It’s that unknown that causes investors to panic. Panic ruled the day today with stock investors taking the Dow Industrials down another 634 points on top of the 513-point loss last Thursday. This puts the market down over 1900 points in 12 days.

This extreme drop in a short amount of time with the bulk of it happening over two days. This type of market action is virtually impossible to avoid by moving to cash. It was driven by politics and occurred so quickly that there was no time to react and move to safer assets.

On a chart this drop is extreme, which puts us into very oversold territory.

Often, when you have moves this extreme, either upside or downside, they are followed by extreme reversals. The problem is that nothing is guaranteed, and you don’t know that for certainty. All you know that the probabilities favor it.

A hard and fast sell off out of nowhere, like the one that we have just experienced, creates a quandary for investors. They consider selling because they don’t want to see their account go down anymore. If they absolutely knew that the market was going to keep going down then it would make some sense to sell.

However, they know that selling into a panic is usually a mistake, because it locks in their losses and hurts their long-term returns.

On the positive side, stocks are not overvalued like they usually are when you have a bear market. A combination of falling prices and rising profits has pushed stock valuations 20 percent below historical P/E ratios. More than 75 percent of corporations in the S&P 500 index exceeded their earnings estimates in the second quarter. In total, corporate earnings are expected to rise 18 percent in 2011 and 14 percent in 2012 (recent Bloomberg studies).

According to another Bloomberg survey, chief strategists at 13 of the largest banks still see the S&P 500 ending the year around 1400, which would be 25 percent higher than it closed today. While I’m not that optimistic, it is positive that they see fair value 25 percent higher based on corporate earnings.

Another positive is that fear and panic hit extremes today.

The VIX closed today at 48, which shows extreme fear. Historically, 42 on the VIX has been a level where markets reverse and start to rebound. The 2008 bear market was the only exception to that rule that I know of.

The negative side of the equation is made up of macro issues.

1- Europe has a debt mess that is trying to sort out and yet to do so.

2- Economic growth in the U.S. is slowing. Most economists don’t believe that we will see a double dip recession, but that is currently a concern.

3- Politics and our debt are creating uncertainty for investors.

4- Panic is currently ruling the markets. Even though the markets are severely oversold and undervalued, there is always the possibility that they can become more oversold. That short term selling pressure can be unduly stressful if your risk tolerance is not correctly set.

Is today’s market action creating a buying opportunity over the next one, three and five years? Or should you be selling? If you think prices will be lower over the long term or you need the money right now, then maybe you should sell. If you believe that prices will be higher one, three or five years from now, then this may be a buying opportunity.

My best advice is to stay focused on the long-term. Generally, decisions made in a panic situation are bad ones.

If you have questions or concerns, feel free to call us at 800-748-4451 or email us (dave at paragonwealth.com, nwhite at paragonwealth.com).

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.  

Ugly Thursday

Posted August 4, 2011 by admin. tags:Tags: , , , , ,
6a00e54fa07ce28833015434449866970c-800wi

 photo by Associated Press

Written by Dave Young, President of Paragon Wealth Management

The Dow Industrials dropped 512 points today. It is the worst point drop since 2008. Over the past 10 days the Dow has lost 1341 points or about 10 percent of its value.

Why have we seen these steep losses in such a short amount of time?

As we’ve seen in the past, it starts with our “leaders”. President Obama and his Senate seem to have one focus. Their focus has been to spend every dime they can find. This administration has taken government spending to an entirely new level. Unfortunately, when they can’t find any more money, they borrow it from our grandchildren and keep spending. That mentally has put us 14 trillion dollars in debt.

The House of Representatives told the White House and Senate to slow down the spending spree before they bankrupted us. A new player in politics, the Tea Party, took the position of an interventionist to an alcoholic. They told the entire group to stop their spending now.

No more compromises, no more kicking the can down the road… Just stop now. 

All of that drama started the market tumbling initially. We anticipated that once the politicians did something, anything, the markets would recover. Our belief was that the initial sell-off was artificially caused by the debt limit drama. That made it very difficult for us to sell and raise cash. Raising cash is the last thing you want to do when you expect the market to snap back to the upside. Surprisingly, after an initial jump higher the morning after the agreement, the market continued lower.

Essentially, the debt agreement gave more money for Washington to spend in the near-term for a promise to cut spending later, once someone else, “a committee” figures out what to cut. Apparently that wasn’t enough to soothe the markets.

Unfortunately, then Europe decided to join the party. Investors decided that Spain and Italy weren’t getting enough of a bailout so the European markets started selling. The European markets closed down hard, right before our markets opened yesterday and today. That was enough to send everyone into a panic. What happens when you panic? You sell.

So where does that leave us?

On the positive side, investors “usually” buy stocks because of the earnings power of the stock they are buying. Corporate earnings are the highest they have been in four years. Corporations have generally been “knocking it out of the park” with their earnings. Corporations are lean and mean and very profitable. Stock valuations are very good. So in theory, stocks should be gaining in value.

At the same time, we have a weakening economy, high unemployment and inept politicians in charge. These factors all throw fear and uncertainty into the equation. Fear and uncertainty usually translate into selling.

But at some point, we run out of investors who are selling because of their fear and uncertainty. At that point, when the sellers are exhausted, buyers will enter into the picture and start buying up the bargains that exist… because of the reasons listed.

The problem is that no one rings a bell to identify when the selling has ended. We do know that stocks are 10 percent cheaper than they were 10 days ago, and there are a lot of reasons to buy them. Over the long-term, this should be a good buying opportunity. In the short term, it’s anyone’s guess.

At these prices, it seems that stocks have already priced another recession. Our data indicates that the last few months have just been a soft patch in the economy and the second half of the year should be much stronger.

We don’t see a double dip recession ahead. 

The problem is that if everyone scares themselves to death, then the fear could gain momentum and create a self induced recession. It would be unnecessary and we don’t think it will happen, but it is possible.

In the end, recent corporate earnings have been exceptionally strong, investor sentiment is very negative (which is good for stocks) and market valuations are low. Overall, these are usually positive indicators for the stock market.

We will continue to follow our models. Stay tuned. 

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.  

Risks of “Safe” Investments

Posted April 14, 2011 by admin. tags:Tags: , , ,
Caution Tape

photo by Henrique Vicente

Written by Nathan White, Paragon’s Chief Investment Officer
Taken from Paragon’s 1st Quarter 2011 Print Newsletter

Throughout my years in the investment management business, I have witnesses how both fear and greed affect investors’ decision making.

As markets approach the pre-financial crash levels, it is probably an appropriate time to asses how emotions impact investing. Investing is basically a set of trade-offs. I believe that many investing mistakes occur in the attempt to ignore this reality.

Life is full of consequences, and most of our troubles come from ignoring this fact before we make decisions. I see so many people searching for the ever elusive holy grail of investing – a good return with no risk. Deep down I think everyone knows that if something sounds too good to be true then it probably is. You cannot get something for nothing, and applying this to investing means that you cannot get a return without some type of risk.

Greed influences us to go after short-term benefits at the expense of the long-term. We want our investments to pay off now, not 20 years down the road. We chase things like performance rather than developing a balanced strategy. Investing is the quintessential act of delaying gratification. Fear on the other hand causes us to shirk away from opportunities that could be essential to our progress. Both fear and green can cause us to miscalculate opportunities and risk.

Risk of “Safe” Investments

Almost everyone acknowledges that investing in the equity markets carries risk. The performance of the stock markets over the past decade has certainly heightened this awareness with many banning stocks altogether. I have met many who no longer desire to have any fluctuation at all in their investments. For now most of these people indicate that they will be satisfied with the low returns of their newly found conservative strategies. We will see how that plays out over time.

Many have been so scared off by the volatile markets that they are seeking safety in bonds or other conservative type investments. I believe that bonds and other conservative investments are essential components of a balanced investment strategy, but they are not without their inherent risks as well. They may for the most part be less volatile in their price movements, and it is this volatility that most people define as risk.

It is first probably good to look at the risks of a conservative allocation in general.

The main risk is that the return realized is less than what is needed to reach a goal, support a lifestyle or maintain the portfolio’s real value after the effects of inflation.

Quite simply low risk equals low return. Inflation is a particularly pernicious risk and probably the bondholder’s worst enemy. Due to the unprecedented government actions and deficits, the risk of inflation getting out of control is very real. With inflation running at three percent, which is close to the historical average, it only takes five years for your purchasing power to decline by 14 percent. you can imagine the damage if inflation ran even higher. To fight inflation governments must tighten the money supply, which is usually done through increasing interest rates. Since the prices of bonds move inversely to interest rates, bondholders could be faced with losses on what they thought were “safe” investments. The risk is exaggerated with interest rates still near historic lows.

The problem that many investors have is that they want equity type returns with a conservative portfolio’s risk, thereby setting themselves up for inevitable disappointment.

I also see a lot of conservative investors that are yield hunters. These are people who just look at the stated yield of a particular investment, usually without regard to how it is calculated, which is a critical factor, and buy whatever is the highest. Yield hunters say they don’t care about the fluctuation of the principal because they just want the juicy dividend or interest. As long as they get it everything is OK. Reality is hard to face when they realize that the yield they purchased is in reality unsustainable and now face possible capital losses.

To be continued…

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.

What About Gold?

Posted March 31, 2011 by admin. tags:Tags: , , ,
Gold Coins

photo by motoyen

Written by Dave Young, President of Paragon

We are regularly asked our opinion on whether or not investors should buy gold. We’ve written about it in the past, but I wanted to give you an update of where we stand now.

Gold is being promoted on a host of television shows. There are a nonstop barrage of advertising promoting it.

Usually buying gold through the brokers that are pitching it on TV is the most expensive way to buy it. If I wanted to buy gold, I wouldn’t buy it through those costly pitchmen.

For the record, at Paragon we are not buying gold right now. That doesn’t mean we are anti-gold, it just means we don’t want to buy it right now. Over the years we have bought and sold gold many times when the valuations made sense.

Our reluctance to buy gold doesn’t mean it won’t keep going up from these already stretched levels. Once a trend establishes itself, it can keep running as long as people keep buying.

An upward trend is not a reflection of value, it simply means there are more buyers than sellers. Right now there seems to be no shortage of buyers.

We aren’t buying gold right now because we cannot justify that it is worth what it is selling for. It’s valuations are severely stretched.

Fear is driving gold purchases.

There is uncertainty in the Middle East, issues with Libya, European debt issues, endless U.S. Government spending and the all encompassing fear of inflation.

At Paragon, we make money by buying early in trends and selling when the trends start to roll over. Most trends in the market last between six and 24 months. While we don’t know how much further gold will run before it rolls over, we do know that it is not early in its trend. We also know that it is anything but cheap.

The only way I would buy gold right now would be for a short-term trading play. However, if I really wanted to make a short-term trading play on metals, I would buy silver instead of gold. It tends to follow the same trends as gold, but move a little harder up and down. Bottom line, I would not take a long-term position in gold at these levels.

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.

 

Are you ready for your retirement?

Posted February 25, 2011 by admin. tags:Tags: , , ,
Beautiful Beach and Sunset


photo by David Saunders Photography

Written by Dave Young, President of Paragon Wealth Management

At the start of a new year, we begin to think about our goals. We might think about getting back in shape, spending more time with our families, eating better, reading more, etc.

Another goal you might have is getting your finances in order to help you prepare for your retirement. Do you know if you are on track to retire at the age you’d like? How is your portfolio positioned? Is your portfolio set properly for your investment risk tolerance? If you have retired, are you on the right track? We’d like to help you answer these questions and more.

We are introducing a new service that we are only offering to our blog readers for the next month. It is a complimentary retirement analysis. We will focus on your investments, give you a second opinion on how they are positioned, make sure your plan is aligned with your goals, and answer any questions you may have.

Call 800-748-4451 to schedule your appointment.

This is one of the most important goals you should evaluate. If you don’t know where you are going, it is difficult to get there.

We will help you answer these questions:

– How much money do you need to save each year to meet your retirement goals?
– What rate of return does your portfolio need to generate?
– What is the probability you will reach your objective – at a different rate of return?
– Is your portfolio properly positioned for where we are in the market cycle?
– Are you taking too little or too much risk?

Paragon began in 1986. Since then we have talked to thousands of investors about their porfolios. These are some of the investment mistakes we’ve seen repeatedly.

Mistakes Investors Make

RISK TOLERANCE
Investors don’t often know how much risk they need to take in order to reach their goals. In addition, they haven’t defined how much market volatility they can comfortably live with. Most of the time they don’t know how much risk they are actually taking because they haven’t defined their risk tolerance. As a result, next time the market goes down they will likely endure sleepness nights as they hope the market recovers. Their odds for success are low.

DIVERSIFICATION 
Investors own many mutual funds and think they are diversified. We regularly see accounts that are holding 40+ funds. What they often don’t realize is that many of their funds hold the same stocks. In reality, they are not diversified at all. They usually take more risk than they realize.

BONDS 
Investors hold bonds for safety and stability. Bonds provided safety over the past 30 years because interest rates declined from 18 percent down to 2.5 percent. Most bonds do not provide safety when interest rates move up. To the contrary, bondholders may see significant losses going forward as rates increase from the all time lows.

HIGH EXPENSES
Many portfolios are filled with expensive mutual funds. Investors are paying management fees, transaction costs and 12b1 fees. They can often achieve the same market exposure through ETF’s at a fraction of the cost.

KNOW WHEN TO SELL 
Buying a stock or fund is the easy part. Knowing when to sell is the hard part. Investors should never own a position they wouldn’t be willing to buy today. We see portfolios full of investments that should have been sold long ago.

Are you ready for your retirement? Is your retirement going well if you’ve retired already? Call us at 800-748-4451 from now until April 1 to schedule your complimentary retirement analysis.

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.

 

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