Money Managers Live

Now Showing in Europe: Negative Yields – Next Stop: The U.S.?

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

Yes folks, the condition where you actually have to pay someone to hold your money or you get back less than you deposited is now a reality in Europe. In anticipation of the start of the ECB’s asset purchase program yields in many European countries are now negative. Why would someone accept a negative yield? One reason is that you might expect deflation to continue to fall pushing the price up even further or giving you a positive real yield. Another reason could be regulations that force people or institutions to hold negative yielding instruments. Unless you’re using your mattress you pretty much have to put your cash in a bank/depository. Fear of an economic downturn or disaster could make getting most of your money back rather than losing it a relatively better prospect. 

Due to the Fed’s zero interest rate policy and QE we in the U.S. have almost been there for years. I bet you are just loving that zero percent you basically get on your savings! In fact, after adjusting for inflation we’ve had negative real yield for some time on cash or near cash instruments. However, now the Fed is in a tough spot trying to raise rates to match the economy because most of the rest of the developed world is doing the opposite. Our relatively higher rates are causing the dollar to soar as foreigners buy our bonds.  As the dollar increases it creates stress on emerging markets and U.S. multinationals. This in turn gives the dovish Fed the excuse to put off the date for rate increases to begin. 

Central banks however can only do so much and their actions to prop up assets prices don’t necessarily translate into economic growth. Overtime the marginal benefit from asset purchases decrease and then we are left with paying the price of trying to unwind them. The pain of trying to unwind then causes the Central Bankers to refrain altogether or even add more QE. The cycle never ends and we are trapped.

Let’s hope the world doesn’t end up being stuck in an infinite loop of QE and negative yields as they seem to be associated with subpar economic growth in the long run – just ask the Japanese.

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.

Uncle, Uncle!!

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

The dramatic drop in the price of oil over the last few months is captivating the markets. It seems it is coming down to a giant game of chicken to see who will cry first: Shale producers, unstable oil dependent export countries such as Nigeria, Venezuela, Russia, or other unconventional sources such as deep-water and oil sands projects. A massive supply glut that has been building for the last few years has finally come to a head. On Thanksgiving Day, to the dismay of many OPEC members, the Saudis decided against a production cut and in favor of letting the price fall in order to maintain their market share. They have decided to let the market do the work in taking out the competition. The competition to OPEC from the so called unconventional sources (e.g. shale, deep water, oil sands) is responsible for most of the global production growth over the last few years.

There is no way to know where oil prices will bottom. The drop is in a spiral that has tremendous downward pressure in the short-term and trying to call the bottom is nearly impossible. Everyone is producing as fast as they can while they are still alive. This causes inventories to continue to build in the short-term thereby exacerbating the supply situation and causing the price to continue to fall further. Drilled wells are literally “sunk costs” and you might as well keep pumping and getting something for them. However, new wells are discouraged from coming online at these low oil prices. The economic effects are just starting to be felt on the oil producers and it will take at least a few quarters to play out. In the end it is as it has been said, the cure for low prices is low prices. Ultimately it is more of a question of how long rather than how low.

The Saudis can withstand the drop with a few caveats. They may act sooner if the price drop creates systemic effects that threatens themselves in a geopolitical manner. The dramatic drop in oil is now getting so low that it is causing tremendous pain for oil dependent countries like Venezuela, Iran, Nigeria and Russia. The contagion effect from a crisis in these countries is becoming a significant concern. If the concerns for economic stability become too great you could see OPEC act as it is in no one’s best interest to have a significant devastation to the global economy.

Ultimately, oil prices are unsustainable at these levels and lower. How does a one percent excess of inventory levels lead to a fifty percent drop in the price of oil? In the end low oil prices are self-correcting as the effect on high-cost producers reduces supply in the out months and years. The big question long-term is whether $80 oil will be the new $100. The oil market is currently oversupplied by 2 million barrels a day. The irony is it really doesn’t take much disruption to take out that oversupply – which would cause prices to ricochet back up. Nigeria, Libya and Venezuela, produce about 5 million barrels a day and all are fragile situations that are hurting significantly. Much of the U.S. shale production is on the ropes, especially among those who came late or in low quality areas. Cheap capital and high prices made the shale boom viable but now the situation is the opposite. Some shale production will always remain but much of it could fail. The majority of shale wells are depleted within two years requiring constant drilling to keep up production. The constant drilling requires continual capital infusions making it questionable even in good times. On December 11, Bloomberg reported that a Deutsche Bank analyst report predicted that about a third of junk rated energy companies may be unable to meet their obligations at $55 a barrel. When prices recover shale will not recover as quickly now that its weaknesses have been exposed.

As I mentioned in a previous blog post, much of the energy boom in the U.S. has been financed with cheap credit to due to the easy money policies of the Federal Reserve. The process of normalization has caused the dollar to rapidly strengthen because our rates are higher relative to other developed countries. Since commodities like oil are priced in dollars a rising dollar pushes the effective oil price down. Rapid currency movements can create economic stress with major casualties. Normally the Fed could combat this by lowering interest rates but rates are already at zero.

Although the price of oil is down over fifty percent since last summer the current panic indicates that a bottom could be found in the first quarter of 2015, if not within the next few weeks. Whether that means it dips into the $20 or $30 range first is a real possibility. However, there is the very real probability that prices could recover quickly. Shale production growth will come off faster than expected. As mentioned previously, most of the current oversupply is due to shale production which can be brought online much quicker than conventional oil projects and requires constant drilling to maintain production. Now the lower price and higher financing costs will preclude new shale production from coming online thereby reducing the future supply growth. From a technical point of view, the price of oil itself is in a panic sell-off with extremely negative sentiment. As the supply/demand dynamics eventually change it could cause the price to snap back as quickly as it went down. As I mentioned earlier the surplus of oil is only one percent above daily demand. That is literally on a few hours of worth of consumption! Oil fields are always in a natural state of decline and so require new means of production to offset the declines. The demand for oil grows faster at $50 a barrel than $100 and demand was growing when the price was over $100. The net effect of lower oil prices is a stimulus to the economy.

So what is our current approach in regards to energy? We are currently altering our exposure in the energy space to reflect the new reality and opportunities. Along with everyone else, we have been surprised by the dramatic drop in oil. The impact on energy companies’ shares has had a negative short term effect on our performance but is also creating great opportunities as the quality assets get taken down along with the weak ones. The challenge in the short term is whether some version of a crisis develops because of the contagion effects of the economic damage done to energy producers or export dependent countries. We will use any continued drop to gain exposure to quality assets in the space but in a patient manner as a bottom has not yet been put in. We want to take advantage of the sell everything related to energy mindset that is currently unfolding. We favor conventional and well capitalized energy producers and servicers and will be moving our exposure in this direction.

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.

WHY USE AN ACTIVE MANAGER?

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

Because certain indexes have performed well over the past few years, those who promote passive investing are recommending that you follow the current fad and just buy index funds. Passive investing can be useful if it is done right. However, it can be dangerous done blindly. Passive strategies are fully exposed to the whims of the market and can expose investors to significant declines and risks. With this approach you must be aware that you will likely go through a 50% decline at some point.

Making money is difficult. Keeping your money is even harder. There seems to be ten ways to lose money for every one way there is to make it. To complicate things further, managing investments is counterintuitive. Research repeatedly shows that most people invest when they shouldn’t and don’t invest when they should. According to studies by Dalbar, for the 30 year period ending December 2013 the average stock market investor earned only 3.69% compounded versus 11.11% compounded for the broad stock market. Underperformance of 7.42% annually for 30 years is a huge penalty for the “average” investor to pay.

The bottom line is that if you do not have the time, resources, and expertise to manage your money then you are walking into a minefield. Over the years I have seen countless people lose their entire savings to bad investment decisions. Whether it be through leveraged real estate, misguided business ventures, poorly structured annuities, bad stock choices, expensive life insurance, loans to relatives, or even offshore investments, the end result is always the same. They lose their savings and what was once a good situation turns into a bad one.

Your success has brought you money. That money can be a blessing or a curse. If you manage it properly then it can help you simplify and enjoy your life by allowing you to do whatever is most important to you. If you don’t make good money decisions then it can bring you more grief than good.

Everywhere you turn there are different voices telling you how to invest. Financial news channels, magazines, insurance companies, infomercials, self-proclaimed experts, etc. There is no shortage of free advice. The problem is that most free advice is worth about what it costs.

Paragon has been guiding investors for 28 years. We have experienced, survived and thrived in some of the most difficult markets in U.S. history. Those very difficult markets include the Crash of 1987, the Asian Crisis of 1998, the Tech Collapse of 2000 and the Financial Crisis of 2008. We have steadily grown in the face of adversity.

Our clients are our friends. We are their guide. Our money is invested right alongside theirs. Most clients initially choose Paragon because of our stellar investment performance. However, as time goes on they realize that our highest value is actually protecting them from their inexperience and stopping them from making bad investments. It is our mission to help you make the right decisions and find financial peace.

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.

 

Merry Christmas!

From all of us at Paragon, we hope you have a very Merry Christmas and a Happy New Year!

-The Paragon Team

Oh, What A Tangled Web We Weave....

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

It looks like we are finally starting to see the consequences of the Fed’s great monetary easing experiment. Getting in was easy – getting out maybe not so much. The fear throughout the Fed’s great adventure was what type of unforeseen consequences could the happen as a result of QE and artificially low interest rates. Now we are starting to find out. 

Along with others, I have said for some time now that QE has distorted the markets. It has recapitalized the banks, which I believe was the main purpose, but the exceptionally low rates and asset purchases have supported asset prices and distorted credit markets as well. The need for yield has caused massive amounts of money to flow into the corporate bond space. Almost all corporations have been able to borrow with ease. Many projects that otherwise would not have been taken on had rates been more normal have received the green light. Due to lack of robust economic growth much of the borrowed corporate credit has gone into share repurchases rather than being used to expand business. It’s hard to blame the companies though for borrowing as much as they can at these low rates.

The process of normalizing monetary policy (i.e. ending QE and raising interest rates) has caused the dollar to strengthen because our rates are higher relative to other developed nations. The other developed nations such as Europe and Japan are just beginning their QE programs which causes their currencies to weaken relative to the U.S. Since commodities like oil are priced in dollars a rising dollar pushes the effective oil price down. A stronger dollar can also encourage capital flight from developing nations and decreases the attractiveness of US products and services. 

The dangers of a credit bubble in high yield space and perhaps other corporate areas could be coming to light. (http://www.bloomberg.com/news/2014-12-11/fed-bubble-bursts-in-550-billion-of-energy-debt-credit-markets.html) The low level of interest rates has created a huge demand for anything with yield.  Junk rated companies have been able to borrow with ease.  Higher rates would have discouraged this.  Example: Much of the energy boom in the US has been financed with this cheap credit.  This caused production and supply to surge causing an oversupply situation with oil. Exacerbating the situation has been the aforementioned rise in the dollar. 

When the prices of anything goes down it is good for those who use or buy it – until a certain point. As oil drops it lowers consumers fuel costs and is good for all industries that use it as an input. However, at some point the positives from the drop in price become a negative. If the drop in energy prices gets so low that it causes the energy companies to fail on a massive scale it then affects the economy as a whole.  At some point the crash of an industry can become systemic and affect the economy as a whole – think the dot-com/tech and real estate bubbles. Whether this happen spill-over effect happens in relation to what is going on in the energy space remains to be seen. 

The same effect can be seen on a geo-political and global economic level. The dramatic drop in oil is now getting so low and causing tremendous pain for countries like Venezuela, Iran and Russia. At first we don’t shed a tear because these aren’t our Favs, but what if Putin and the Iranian clerics do something drastic if they feel they are backed into a no win situation?  Venezuela is getting close to default and that is having ripple effects on other emerging markets. 

I don’t mean to be so tough on the Fed as I don’t believe they are the cause of all our present or future troubles.  Nothing happens in isolation and they are one piece of the puzzle as there are many other factors at play (e.g. regulation, fiscal policy, etc.).  Let’s hope the adjustment back to a more normal monetary policy can be made without too much pain and disruption.

Could what is currently happening with the energy markets be a sign of things to come? How far does the unraveling go?  Does it become systemic or not?  How much is already priced in?  No way to know until after the fact.  One thing for certain is that these type of events will create opportunities in the markets that we have been waiting for.

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 Young Family at the Festival of Trees

Each year the Young Family and friends donate a fully decorated tree to Primary Childrens Hospital fundraiser called The Festival of Trees.  There are over 800 trees at the festival, each with its own unique style: ornate, whimsical, creative, humorous, classic, and sentimental. Every penny from the tree auction at the Festival of Trees benefits children at Primary Children’s Hospital.

This year Cathy and team out did themselves, our tree sold for $6500! To see pictures of the amazing tree Click Here.

The tradition of the Festival of Trees started for the Young Family after their first Grandson Jack was born as an expression of gratitude to the doctors and nurses at Primary Childrens Medical Center who saved baby Jacks life.

Jack had some major medical complications and the doctors only gave him a ten percent chance of survival. He was in the intensive care unit at Primary Children’s Hospital for almost four months. The nurses and doctors at Primary Children’s did an excellent job and saved his life. He is now fully recovered and a healthy, happy, six year old boy.

On behalf of all of us at Paragon Wealth Management, we would like to wish you a Merry Christmas and Happy New Year!

 

Leading Economic Indicators Suggest Growth Continued Into 2015

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

The Conference Board’s Leading Economic Index (LEI) rose in October by 0.9% for its ninth consecutive gain.  The consensus was for a gain of 0.6%.  Eight out of ten components posted improvements with all components strengthening over the last six months.  These figures suggest further upside momentum to growth and are consistent with above-trend growth.  U.S. growth continues to modestly improve while growth in the rest of the world modestly decelerates.  In the end, I think fears of deflation unwarranted – especially in the US!  Central banks are still on track to provide substantial amounts of liquidity in 2015.  The question is where all that money will end 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.

Buy And Hold

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

I was recently reminded of how much I disagree with the “Buy and Hold” concept of investing. One of our clients, brought in several stock certificates that she inherited from her family. They were dated from 1902 to 1920. That was a period of time when mining companies were very popular with investors. She asked us to research the current value of the certificates.

Her family held several of these certificates for over 100 years. Based on the number of shares and their valuation levels it appeared that some of these stocks had been valuable at one time. Unfortunately, her family had followed the Buy and Hold investment strategy and still continued to hold them.

After some research, it turns out that one company had been sued into oblivion, one morphed into another company and then that new company collapsed, one just disappeared, one went bankrupt and another had financial fraud issues. Bottom line, all of the stocks had gone from being valuable to becoming worthless….over time. They bought and held just like the “experts” told them to.

While this may seem surprising, it really isn’t. Imagine if your relatives in 1920 had the foresight to buy the original 20 stocks that made up the Dow Industrials average and held them until today. You would be very rich, right? Your relatives had bought the largest, highest profile stocks available 94 years ago. Actually, only six stocks (out of the original 20) from the Dow Industrial Average still exist.

If you read our blog, you know that I am not a fan of the Buy and Hold approach to investing. Actually, I get annoyed when I hear financial advisors and the media espousing its virtues. Some advisors support it with such zeal that it almost seems like it is a religious experience for them. I often wonder how many of those advisors actually have their own money invested in a Buy and Hold strategy.

The truth is that Buy and Hold works best sometimes and Active Management works better other times. Different styles of management come in and out of favor over market cycles. The big problem with Buy and Hold is that everything seems great while the market is going up. However, as soon as the market starts going sideways or down, then the Buy and Hold strategy becomes very difficult to stick with. If you cannot stick with your strategy then it is likely that you will never be able to generate good long term returns. If you aren’t going to generate good long term returns, then what is the point of investing?

In both the 2000 and 2008 bear markets, investors who followed a Buy and Hold strategy and invested in the S&P 500 lost roughly 50% of their value during those bear markets. Many found it too difficult to stick with that strategy and sold out of their investments near the bottom of the decline. Many investors never recovered from their extreme losses.

John “Jack” Bogle of Vanguard is one of Buy and Hold’s biggest proponents. It is hard to take him seriously when you understand that he has personally made a fortune pitching the Buy and Hold strategy for years. He is definitely not an impartial voice in the debate.

According to a November 28, 2013, Wall Street Journal article, Jack Bogle is invested in his son’s fund. It is even more interesting when you realize that his son, John Junior, has been managing a fund since 1999 that follows a very active investment strategy that is the polar opposite of Buy and Hold. His fund uses computer models to analyze earnings surprises, relative stock valuations, corporate accounting issues, etc. His strategy is about as far away from a Buy and Hold strategy as you can get. Even more interesting is that Jack (senior), considered the unofficial spokesman of the Buy and Hold movement, is personally invested in his son’s highly “Actively Managed” fund.

If John Bogle senior does not believe in using “Active Strategies”, then why is he personally invested in a fund that follows a very active strategy? Why is he paying higher fees than his index funds charge to invest some of his own money? Interesting….

My belief and experience is that pro-active strategies, such as the ones we follow at Paragon, require a lot more work to execute but provide the highest probability for long term investment success.

As always, if your risk tolerance or investment objectives have changed, please reach out to me or one of the members of our team, and we can discuss any adjustments we need to make to your current plan. We appreciate the confidence that you put in us.

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.

ADJUSTMENT PERIOD

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

The era of QE has been a difficult environment for active managers. The last five years have been a heyday for the passive investor, aided directly and indirectly by the Fed’s Quantitative Easing (QE) programs, stocks and bonds have moved up in an indiscriminate manner. All one had to do was simply show up. Bonds have been directly aided by the trillions the Fed has purchased while equities have indirectly benefitted from the implied “put” or backstop inferred by these Fed actions. The Fed’s actions to keep rates artificially low have created market distortions that have interfered with many of our quantitative indicators.

When all equities or bonds generally get rewarded the same regardless of their quality or differences, it’s hard for the skilled manager to outperform. A rising tide of liquidity has lifted all boats making it easy for anyone to navigate in the harbor. But once the tide starts to recede, experience and skill are what matters. We have seen improvement with our models over the last year coinciding with the gradual reduction of QE. As markets return to “normal” we are better able to assess the risk and rewards of certain moves and strategies. We are seeing a number of opportunities develop that haven’t been available for years.

In the short run the market is looking tired. We have rejected the doom and gloom scenarios that have been so prevalent since the financial crisis and have caused many investors to miss out on the bull market. However, fewer stocks are hitting new highs and the breadth has been getting weaker. The uncertainty surrounding the end of QE and the timing of rate increases next year are factors contributing to the hesitancy. This is only natural and healthy in the long-run. As previously mentioned it also creates opportunities for us that have not been available for the last four years. Over the last few years we have held a cash position which has been a drag on performance. Going forward, this cash position is an advantage as it helps to cushion the downside and provide flexibility to take advantage of opportunities provided by any volatility and uncertainty.

Although the risks have risen, this doesn’t mean investors should get out completely. The market has been overdue for a correction for some time but it doesn’t mean that everything is ready to fall apart. Getting completely out now could cause you to miss crucial gains if stocks continue to rally as they have. The last four years have shown the futility of trying to time the market in an all in or out manner. It is still a bull market until proven otherwise.

The current economic data has been stronger indicating that the economic growth is picking up instead of getting weaker. Ultimately that is a good sign as it will support earnings growth that has been the key foundation for the current bull market. Any correction that comes will probably be more short-term and establish the next leg up for the market. Therefore, a correction would be viewed by us as an opportunity rather than a harbinger of doom. It is only natural after five years of market advances and ahead of interest rates starting to move up to get some market hesitancy or disruption. Our current exposures are to technology, energy, and materials which are late-cycle stocks and tend to do well in rising rate environments. We also continue to favor various segments of the healthcare sector such as medical device and healthcare providers. Several emerging market opportunities are also looking more promising than in the past and we have started to act in a few of these areas such as Mexico and Brazil.

It is no secret that we have been cautious on the bond market for some time. As the sun sets on QE the angst over when the Fed will begin to raise rates and by how much is growing. Markets always like to price actions in ahead of time and right now it seems the equity market is being affected to some degree by this interest rate uncertainty. However, the bond market has not moved much yet. Many thought that bonds would have a difficult year as they began to price in rate increases. So far, bonds have done the opposite and surprised many by having a good year. The inevitable is coming though and the window for bond gains is closing as we creep toward June of next year which is the most accepted time for rate increase to begin. Any equity market weakness will give bonds more time to put off the reckoning.

Although the potential for a bloodbath in the bond market is high, that doesn’t mean it will happen. It will probably be more like death by a thousand cuts. The Fed will be very slow and steady in raising rates as to minimize market disruption. After all, they do hold about $4.5 trillion of bonds!  Even if interest rates rise in a slow and gradual manner (which is what I believe will happen) bonds will still produce negative or flat real returns at best.

For example, take a look at the interest rate sensitivity of a broad composite of investment grade bonds such as the Barclays US Aggregate Bond Index. If interest rates are a half to one percent higher a year from now, the index could be down 2.5 to over 5 percent respectively. The current yield of about two percent would still not offset the losses.

In preparation we have been making changes and getting ready for the coming environment. We have been early on this call which has caused us to underperform in Managed Income this year so far, but not by a lot and we are better positioned for what is to come. We believe this approach is the most effective from a risk/reward standpoint and will pay off in the environment to come. Now is the time to take a look at the risk in bond or fixed income holdings and make adjustments. The first one to two percent moves from the bottom will be the most painful.

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.

Looking Past Scary Financial News Headlines

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

I encourage you to learn more about investing and planning. It will pay dividends in many ways, and we are here to assist you as you take steps to educate yourself.

But I caution you about spending too much time in front of the financial news channels dotting the cable landscape or the many Internet sites that are just a mouse click away.

It’s not that they don’t report hard news. They do. But there are times when markets get volatile and the “shrillness meter” hits alarming levels.

Just a couple of months ago, when the Dow fell over 300 points in one day, I went onto the MarketWatch website and found a section highlighting the most popular stories.

1. “Warning: the Plunge in Stocks Is Just Beginning.” Well, stocks quickly recovered and claimed new highs.

2. “S&P 500 Suffers Largest Weekly Loss in 2 Years.” True, but we emphasize the longer term and continually stress that your plan should take into account setbacks in the market. Be very careful of allowing weekly volatility sidetrack a multiyear plan.

3. “Three Market Warning Signs that Predict a 20% Tumble.” See my comment on article number one, above.

The top three stories were playing on the fears of investors. Simply put, bad news sells. But it can be confusing if the noise isn’t filtered.

It’s been over 570 days since we’ve had a 10% drop in the S&P 500 Index, or a decline that would officially be called a “correction.” Going back to mid-1940s, the median time period between corrections has been 121 trading days, and the average has been 273 trading days.

Markets never move up in a straight line and we are due for a 10% pullback, which, coupled with the expanding economy, would be healthy. No one can accurately predict when that might occur but it will happen. The portfolios we recommend have a long-term time horizon and are designed to help you achieve your personal financial goals.

Stay focused on your goals and make adjustments that take into account changes in your personal circumstances. Ignore fear-mongering that can be deafening during market volatility.

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.