The World Didn't End After All...

photo by eflon

Written by Nathan White, CFA

Just over a year ago the world seemed as though it was about to end. Fear ruled the day. The Dow Jones Industrial Average bottomed out at almost 54% below its peak from October 2007.

I highly doubt that you could have found anyone at that time who believed that one year later the Dow would be around 10,500. At the time you would have been looked upon as a fool for saying so!

During that time and the subsequent market rebound, active managers were able to position their portfolios to take advantage of the changing market. Flexibility is a significant advantage to the active money manager.

During turbulent times they are able to take advantage of market dislocations. This is not to say that they always get it right, and most don't, but that does not mean that active management does not work, but rather that one should be selective in choosing an active money manager.

Many passive managers believe there is no way to obtain an advantage over the "rational market" during those situations. My experience has shown that until humans become devoid of emotions, the market will always get pushed to extremes, and it is these moments that offer opportunity for the savvy investor!

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.