Tag Archives: recession

Are we in a Recession?

Posted December 8, 2011 by admin. tags:Tags: , ,

 

Some people say we are currently in a recession. Others say we aren't… 

Watch this short video to learn Paragon's wealth managers thoughts on being in a recession. 

What do you think? We'd like to hear your feedback. 

This video was filmed on Nov. 30, 2011.

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.

The Probability Of A Recession

Posted October 21, 2011 by admin. tags:Tags: ,
Rolling the dice

Written by Dave Young, President of Paragon Wealth Management

So are we going to have a recession or not?  Every time the market drops a thousand points it seems as though stocks are priced as if there is going to be a severe recession. Listening to the commentators you would think the world was going to end any day.

As we have mentioned repeatedly over the past few months, the indicators that we track haven’t shown a high probability of recession. We don’t discount the fact that we may end up in another recession but up to now the high level of pessimism is not consistent with what our indicators are showing. This is in contrast to the endless interviews of advisors proclaiming that the next recession is just around the corner.

In the update we received today from Ned Davis Research much of the data they present doesn’t indicate an imminent recession either. As a matter of fact, some of the data looks more promising than it has since the sell off started last summer. Below are some of the statistics they sent us in our update.

The Philly Fed’s general business index surprised economists with a big positive jump of 26.2 points to 8.7. It was the biggest increase in 31 years and the 4th largest on record. Optimism about the future also improved.  The future activity index rose to its best level in six months.

The conference board’s Leading Economic Index (LEI) rose 0.2%, up for the fifth straight month.  The CEI rose 0.1%, as all four of its components picked up.  According to the Conference Board, all composite indexes suggest “the expansion in economic activity should continue, but at a modest pace in the near term.” Overall the Board sees about 50% chance of recession in the next six months.

The Ned Davis Research Economic Timing Model rose to +16 from +12, which is historically consistent with moderate growth. Overall, the indexes were mixed but the positive news on the Philly Fed’s General Business Activity Index was very interesting.

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.

Are We Headed For Another Recession?

Posted September 16, 2011 by admin. tags:Tags: , ,
Chalkboard


Written by Nathan White, Paragon’s Chief Investment Officer

The economic data is still presenting a mixed bag on whether a recession is coming or is already here.

For example, industrial production and manufacturing increased in August contrary to the ISM data that slipped negative for the first time since May 2009. Industrial production is up 3.3 percent on a year over year comparison which indicates moderate economic growth. Overall, the economic leading indicators are still pointing up (anemically so, however) and a recession has never started when they have been advancing.

Much of the slowdown is being affected by the political headlines that are driving markets. 

This uncertainty naturally creates a sort of self-fulfilling prophecy as business and consumers hold back. The bad news is that the economy is not growing at a rate that can significantly reduce unemployment or raise standards of living. The good news is that the economy is sort of bouncing along the bottom, and it is hard to get significantly worse. It is running more or less at what I call its replacement rate (e.g., people buy a car when the old one dies as opposed to upgrading because they’re doing well) and until the debt overhang is worked off, the economy will have a hard time taking off.   

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.
  

Continued Recovery or Double Dip Recession? Part II

Posted August 17, 2010 by admin. tags:Tags: , , , ,
Newspaper Paper Headline


 Photo By Shutterstock

 

 

Article taken from Paragon Wealth Management 2nd Quarter Newsletter

 

Written By: Nathan White, Chief Investment Officer

 

Media & Current Affairs

In the short-term emotions rule and volatility reigns as investors are pushed around by headline news. A study of bear markets by Ed Clissold of NDR showed that bear markets that occur on rallies after recessions tend to be relatively short and not associated with a new recession- a sort of “echo bear”.

Worries of the European debt crisis and its ramifications are coinciding with the slowdown in economic data compounding the market nervousness. Many are worried that the austerity policies being promoted by the European Countries will stifle the economic recovery even though those actions would reduce their large deficits, which are what the markets were worried about in the first place. The U.S. administration is arguing the opposite of the Europeans with the belief that it is too soon to withdraw stimulus and reduce deficits. 

I find it strange that people are fleeing Euro zone currency and debt due to fear over deficits into U.S. government debt, even though the U.S. is preaching more deficit spending? Somehow I don’t think that will end well. We are therefore avoiding long-term U.S. treasuries, as they could be a time bomb waiting to happen. It might not happen soon, but the low return (below three percent for 10-year Treasuries at the time I am writing this) is not worth the risk in our opinion. 

Above all, the market hates uncertainty and with the bear market still very fresh in investor minds we are in a condition where people are very fast to sell and ask questions later. A report in the Wall Street Journal on June 14 by E.S. Browning (Rapid Declines Rattle Even Optimists) showed that the 12.4 percent drop in the Dow Jones Industrial Average from the peak on April 26 to June 7 occurred in only 42 days. The article indicated that the only other time that the Dow has fallen that fast in the past 80 years was at the start of the Korean War. 

 

Conclusion

As I write this article, the S&P 500 is down about 14.5 percent from its peak. That’s only 5.5 percent away from the negative 20 percent that most consider as the condition for a bear market. It seems the market is pricing in a double-dip recession whether it actually unfolds or not! We have been slowly raising cash over the past month or so and as the market continues to show uncertainty. If our indicators weaken, we will raise more, but for now we still want to have exposure to the market as it could strengthen as fear subsides and investors realize that the market has already priced in any bad news. After all, we are still in recovery mode. Although it is weak, a recovery is still a recovery. 

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.

 

Continued Recovery or Double Dip Recession?

Posted August 6, 2010 by admin. tags:Tags: , , ,
American Stock Exchange



Photo By Shutterstock 

Article take from Paragon Wealth Management 2nd Quarter Newsletter

Written By: Nathan White, Chief Investment Officer

During the second year of an economic recovery, 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.

Part of the reason the market did so well in 2009 was because it was rebounding off extreme oversold conditions that were unwarranted. Now the we have entered the second year after the recovery low, the economic dad is slowing down, which is contributing to the reasons for the recent market decline.

The big question now is whether or not the recovery will continue, and if so at what pace, or are we headed for the dreaded double-dip recession scenario so widely reported in the press?

GDP, Income Figures, Government Actions
First quarter real Gross Domestic Product (GDP) was recently revised downward to a 2.7 percent annual rate, which is pretty anemic for this stage in the recovery. This shows that the recovery is not as robust as in past recoveries especially considering how severe the recent recession was. The economic data currently coming out is showing a mixed picture-as is to be expected at this stage of a recovery.

The main reason for the downward revision of GDP was that personal consumption expenditures were adjusted down and this is a significant portion of the GDP figure. It is a possible sign that consumers are still very timid and might not be willing or able to spend. On the other hand, income data show that personal income rose 0.4 percent in May, and this figure has been up for seven straight months.

Increasing income figures strengthen the recovery as it eventually provides people with more money to spend or shore up their finances. However, continued high unemployment, approximately one million less jobs than a year ago, is offsetting the benefits that are coming from income growth. For the most part the economic data is coming in at about average for this stage in the economic cycle. We hoped for better numbers due to the severity of the last recession. A less robust recovery is due to the damage done by the last recession and may indicate that we have not cleared all of the ghosts out of the closet yet. 

Government actions have created a significant amount of uncertainty, which continues to hamper the recovery. The most positive figures coming from the economic data are the rise in productivity and corporate profits. These two data points have performed better than average, and in my view are the main support for the rally off the bear market lows.

The productivity data has enabled corporations to increase profits in the absence of significant increases in sales. I believe this is a significant positive factor for the market moving forward. If the recovery continues with even small increases in sales, it could considerably boost earnings. On the other hand, if the economy wanes high productivity along with current relatively strong balance sheets can serve to support earnings in the face of a condition in which they would normally fall. In the end, markets are moved by earnings. Even if we entered another recession, you could see corporate profits hold up relatively well, which would end up supporting equity prices.

Article to be continued next week…

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.

The Case for Optimism

Posted November 5, 2009 by admin. tags:Tags: , , ,
Happy Retired Couple


iStock photo

Written by Dave Young, President of Paragon Wealth Management

In August, BusinessWeek ran a cover story called “The case for optimism.”

The premise was simple:

Beyond the issues facing the global economy, there are many underlying positives that give cause for optimism looking forward.

Powerful forces under the surface will drive economic growth, and that growth will drive stock prices. Examples include the positive impact of technology, the recovering U.S. housing market, the revitalization of economies and the incredible energy from the developing world’s educated youth and emerging middle class. 

Leading indicators show that the recession likely ended in June. 

Our indicators also showed that the end of June was the turning point, and have only strengthened since. We believe this recovery is real. Contrary to what the pessimists say, it appears to be very sustainable.

The FED is in easing mode. Usually they keep interest rates low until 20-30 months after the end of a recession. The low interest rates should power the economic turnaround. We don’t expect rates to move up until unemployment starts declining, and that is at least 18 months out. We are not concerned about inflation at the moment, but it is one of the factors we will be watching.

The markets are back into a positive, upward trend. 

All 42 of the global markets we track are above their 40-week moving average, which is very bullish. That’s what markets do. They go down, and then they go back up. Then they repeat the cycle. It’s pretty basic, but it’s the way it’s always been.

We will continue to run our models and adjust our portfolios accordingly. The biggest wild card is to what extent politicians jump in and slow down or disrupt the cycle. Their actions won’t kill the recovery, but the debt they are piling on will likely slow it down.

In 1907, U.S. financier J. Pierpoint Morgan single-handedly averted a banking panic among U.S. investors. Later in life, someone asked him his best guess as to the direction of markets.

His answer: “They will go up, and they will go down.”

One hundred years later, that’s still the best answer for a short-term market forecast. No one can predict market movements in the immediate period ahead.

At Paragon, we will continue to follow our models and adjust our portfolios to whatever the market throws at us. No one likes volatility, but for most of us it’s the necessary price to arrive at our ultimate destination.

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.

Historical Data Shows Best Performing Investments After a Recession

Posted September 10, 2009 by admin. tags:Tags: , , , , ,

The latest news from Paragon…

Wealth Management Firm Offers to Help Investors Position Their Portfolios for Recovery

PROVO, UT — 09/10/09 — Paragon
Wealth Management
advises investors to position their portfolio in the
areas of the market that have historically performed well after a recession
and has offered to help by providing complimentary portfolio reviews.

"We pay close attention to the economy," said Paragon's President and
founder, Dave Young. "In July our economic models indicated it was highly
likely the recession ended in June."

Paragon's wealth
managers
have encouraged investors to become fully invested in the
stock market since March of this year. They recommended moving to a fully
invested position when most investors were selling.

"The first and sharpest stage of the market recovery usually occurs right
after the initial market plunge and takes about three to four months," said
Young. "We believe stage one occurred between March 9 and June 30. The
second stage of recovery occurs after the recession ends, which we believe
was around the end of June."

"This difficult market highlights why active wealth management is so important," said Young. "Because market
dynamics are constantly changing and evolving, we believe the best
investment approach is one that actively adjusts, moves and changes based
on market conditions."

Following these strategies from January 1998 through August 2009, Paragon's
growth portfolio has generated a total return of 312.43 percent, net of all
fees. During that same time the S&P 500 posted a total return of 28.51
percent.

Investors can visit www.paragonwealth.com to schedule a portfolio review.

About Paragon Wealth Management

Paragon Wealth Management is a wealth management firm that was established
in 1986. They actively manage all types of traditional and retirement
accounts such as IRA and 401(k) rollovers, and pensions and trusts. Paragon
has fiduciary responsibility. Call 800-748-4451 for more information.


Although the information included in this report has been obtained from
sources Paragon believes to be reliable, we do not guarantee its accuracy.
All opinions and estimates included in this report constitute the judgment
as of the dates indicated and are subject to change without notice. This
report is for informational purposes only and is not intended as an offer
or solicitation with respect to the purchase or sale of any security. Past
performance is not a guarantee of future results.

Investment performance
reflects time-weighted, size-weighted geometric composite returns of actual
client accounts and not back tested hypothetical returns or performance.
Investment returns are net of all management fees and transaction costs,
and reflect the reinvestment of all dividends and distributions. The S&P
Index is a market-value weighted index comprised of 500 stocks selected for
market size, liquidity, and industry group representation.


What Happened to the ‘Depression’?

Posted September 3, 2009 by admin. tags:Tags: , , ,
Statue of a soup line


photo by cliff1066

Written by Nathan White, Chief Investment Officer

Below is an article taken from the Wall Street Journal Online. This article does a great job of summarizing a lot of the misconception regarding the magnitude of the economic downturn and the subsequent fiscal and monetary reactions. It focuses on how politicians exacerbate situations for political purposes – surprise!

I hold the same view as Professor Melzer that the economy would turn on its own and the main threat now are government actions that will slow the recovery. Policy makers often overreact to economic downturns and enact policies (e.g., higher taxes, more regulation) that make it harder to let the economy grow.

What Happened to the Depression?
Despite the rhetoric from Washington, we were never close to 25% unemployment.

By Allan H. Meltzer

Day after day, economists, politicians and journalists repeat the trope that the current recession is the worst since the Great Depression. Repetition may reinforce belief, but the comparison is greatly overstated and highly misleading. Anyone who knows even a bit about the Great Depression knows that this is false.

The facts we face today are very different than the grim reality Americans confronted between 1929 and 1932. True, this recession is not over. But it would have to get improbably worse before it came close to the 42-month duration of the Great Depression, or the 25% unemployment rate in 1932. Then, the only safety net was the soup line.

The current recession is also much less severe than the 1937-38 Depression. A more accurate comparison is to the 1973-75 recession. Today’s recession is as deep and most likely won’t be much longer than the one we experienced some three decades ago. By pointing this out, I do not intend to minimize the damage that the economic crisis has had on individuals and businesses. But as policy makers make decisions in order to alleviate the recession, they are not helped when economists overstate its severity.

The table nearby compares the current recession, the 1937-38 depression and some past severe postwar recessions. If the recession ends this summer—as many experts predict—the record will show that it was not very different from other postwar recessions, but very different from the 1937-38 and 1929-32 Depressions.

So why do many opinion makers insist on inaccurate and frightening analogies that overstate the severity of present conditions? I believe there are several reasons.

First, there is a strong political motivation to make this recession out to be worse than it actually is. The Obama administration wanted to
make it appear as though it saved us from an incipient disaster, so it
overstated its achievements. The White House also wanted to foist its huge “stimulus” program on the country in order to redistribute income. That pleased many Democrats, but did very little to restore growth.

Many others repeated the administration’s hyperbolic claims. One reason is because there is genuine uncertainty about what has happened and what is likely to come. Short-term forecasts have major errors, and extrapolation of current data adds to misinformation. Then there are economists who would like
to see government take a larger role in the economy. They’ve chosen to use the recession as a pretext for arguing for this change.

New York Times columnist Paul Krugman and the International Monetary Fund repeatedly proclaimed that more government spending was a necessity. Most economists now believe that
the recession is expected to end before much of the government spending takes hold. And while the improvement in recent GDP data reflects a big increase in government spending, consumer spending declined again in the second quarter. The $787 billion of fiscal stimulus has done little for consumers. Keynesian economists always fail to recognize the powerful regenerative forces of the market economy. The financial press—many of whom share their same political assumptions—endlessly reproduces their beliefs.

The Federal Reserve also shared this Keynesian viewpoint. It provided unprecedented monetary stimulus, increasing the monetary base by more than $1 trillion. Much of this increase corrected for its major mistake: allowing Lehman Brothers to fail. After 30 years of bailing out almost all large financial firms, the Fed made the horrendous mistake of changing its policy in the midst of a recession. That set off a scramble for liquidity and heightened the public’s distrust in the market.

This had world-wide repercussions. For four months, many financial markets remained frozen and real activity collapsed. Allowing Lehman to fail without warning is one of the worst blunders in Federal Reserve history. Extrapolation caused many market participants to conjecture that we were in a depression. The New York Times and others piled on, speculating foolishly about the end of capitalism.

Now, with recovery in sight, we need to ask what kind of a recovery to expect and what kind of policies are appropriate. My best guess is that the recovery will be a bumpy ride along a low-growth path. Recovery will be helped by lots of monetary stimulus and low inventories. Some calendar quarters will see healthy growth, but trend growth will be low because housing will remain weak, the cash for clunkers program borrowed sales from the future, and the
Obama administration’s economic program raises business costs and reduces profits.

Many pundits argue that we need another stimulus package. I disagree. The proper response now is to repeal what remains of the misguided stimulus and avoid the cap-and-trade program.

In their response to the recession, Congress and the administration were more interested in redistributing income than encouraging growth. They also ignored the lessons of the successful Kennedy and Reagan reductions in marginal tax rates. They added to their mistakes by enacting a temporary tax reduction as a main element of the $787 billion stimulus. Don’t they know that Presidents Ford, Carter and Bush failed to stimulate spending with temporary tax reductions?

A sensible administration would revise its policy. It should start by scrapping what remains of the stimulus. As the world economy recovers, the United States should choose to expand its exports so that it can service its large and growing foreign debts. That means reducing corporate tax rates to increase investment. Instead of implementing policies that increase regulation and raise business costs, we need to increase productivity. And the Fed should soon begin to reduce the massive volume of outstanding bank reserves, which is the raw material for future money growth.

Mr. Meltzer is a professor of economics at Carnegie Mellon University and the author of “A History of the Federal Reserve” (University of Chicago Press, 2004).

Is the Recession Over? How Should I be Invested Now?

Posted August 14, 2009 by admin. tags:Tags: , , , , ,
The New York Stock Exchange Flags

Written by Dave Young, President of Paragon Wealth Management


photo by buggolo

We have been encouraging investors to become fully invested in the stock market since March of this year. We likened the stock market to “the sale of the century.”

At a time when most investors were selling all of their investments, we told investors to move back to a fully invested position.

We recommended that you as an investor take advantage of this rare, although scary, situation by investing in those areas of the market that have historically performed “best” after a market meltdown. We didn’t just give the typical – but useless – “cautiously optimistic” outlook. We named specific areas of the market you should be invested in.

Since the March 9 low, through July 31, the S&P 500 has gained 46 percent. It has made back its losses from January through mid-March and is now up 10.9 percent year-to-date through July 31. During that same time, our growth portfolio, Top Flight is up 17.2 percent year-to-date.

The reason we are up substantially more than the market is because we invested in those areas that perform best after severe market decline — just like we recommended. If you followed our advice, you were rewarded.

Going forward, the question is, how should an investor be invested?

Our indicators and the models we follow are showing there is a high probability the recession ended in June — although this hasn’t shown up in the press and is not yet mainstream knowledge.

The first and sharpest stage of the market recovery usually occurs right after the initial market plunge and takes about three to four months. We believe stage one occurred between March 9 and June 30. The second stage of recovery occurs after the recession ends, which we believe was around the end of June.

If it is true the recession ended in June, then we now want to be invested in those areas of the market that do best during the second stage, or after a recession ends.

The second stage lasts for about six months. Following the last eleven recessions, the data clearly show that certain areas of the market consistently perform best during stage two.

Typically, bonds perform poorly after recessions and should be avoided. Interest rates get pushed down during the recession, and then, as the economy starts to expand, demand for money increases and interest rates go back up. When interest rates go up, most bonds get hammered and lose money.

Bonds are one of the worst places to be as an economy emerges from a recession.

Unfortunately, many misguided investors have been running to bonds for the past six months, hoping to find safety. If history repeats, they will find the opposite of what they seek.

From a big picture perspective, small cap, growth, commodities and emerging market stocks have performed the best for the six months following the end of the recession. On a sector basis, energy, materials, tech and consumer discretionary stocks performed the best.

On the other hand, in addition to bonds, other sectors that usually perform poorly after a recession ends — and should be avoided — include consumer staples, health care and telecommunication stocks.

This difficult market highlights why “active” investment management is so important.

If market dynamics always stayed the same, then a simple buy-and-hold approach would most likely work well for investors. Because market dynamics are constantly changing and evolving, we believe the best investment approach is one that actively adjusts, moves and changes based on market conditions.

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 Obama Means for the Stock Market

Posted December 18, 2008 by admin. tags:Tags: , , ,
President Obama

Written by Dave Young, president
photo by Bohphoto
 
When Barack Obama began his race for the White House his rally cry was to get us out of Iraq as soon as possible. That morphed into a call for change from the Bush policies of the previous eight years. Finally, right before the election it moved towards fixing our economy.
If the President Elect does what he originally campaigned on, then some of his pro-regulation, pro-tax policies could damage our economy over the long-term. 
During his campaign he spoke about how important it was to tax those deemed rich, while slightly lowering taxes for everyone else.
Editorials in the Wall Street Journal claim his plan would have a marginal tax bracket of 62%, with all taxes taken into account, on income over $250,000.
Increased taxes translate into government removing money from the marketplace and then deciding where to reallocate it. This diminishes savings, investments and job creation.
Historically, government reallocation of those funds benefit certain interest groups, but doesn’t benefit the broad economy. This negative wealth transfer effectively mutes economic growth.
 
Historically, when democrats take the white house, the market usually does better than under republicans. 
Usually going into an election, if a democrat is winning, Wall Street expects the worst, and the market sells off in advance. After the democrat gets into office, then Wall Street realizes they aren’t going to do what they promised, breathes a sigh of relief, and then the market rallies. The wild card is whether or not Obama will implement what he campaigned.
His most recent statements about the economy give the impression he will promote clean energy, infrastructure and education. If so, stocks in those sectors should benefit.
We know health care is going to be impacted. It’s too early to tell if it will be a positive or negative impact. Previous attempts to socialize medicine were met with health care stocks declining.
 
So far, the markets have followed their historical election pattern. 
The difference this time was the magnitude of the decline. This year’s decline was the worst ever to precede an election. If the market continues to follow historical patterns, then 2009 should be a strong year for the market.
After a decline this severe, I believe it is most important to select those sectors that usually generate the highest returns during a recovery. It is easier and more predictable to pick those sectors than to guess what Obama is actually going to do.
 
The average recession lasts 11 months with the shortest being 6 months and the longest being 16. 
This current recession is now 12 months long. The stock market tends to recover three to four months before the recession ends.
Following previous recessions, the strongest sectors (in order of strength) were Consumer Discretionary, Information Technology, Financials, Industrials, Materials and Consumer Staples. The weakest sectors (in order of weakness) were Utilities, Telecomm, Energy and Health Care. For many, the critical decision is between being conservative or growth oriented over the next eight years.
 
Looking forward investors can:
–Invest in money market funds; bank CD’s, fixed annuities or treasury bonds. These will guarantee returns in the 2-4% range. Depending on the product, your money is locked up at historically low rates for three to seven years.
–Invest in a well diversified, strategic portfolio made up of beaten down bonds, stocks and real estate. This portfolio should be positioned in the sectors mentioned above to capitalize on areas of the market that historically recover the fastest. This panic has pushed stocks down to the same levels they were 11 years ago.
We do know that returns after previous bear markets have been exceptional.
Most importantly, investors should reallocate their portfolios based on opportunities going forward. Looking backwards or following a “rear view mirror” investing strategy usually causes an investor to invest at the wrong place at the wrong time.
Feel free to leave comments or contact us if you have questions or concerns. We can be reached at 801-375-2500.

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