Jacksonville Investment Advisors
Our investment strategy? Generally, we try to avoid the common investor mistakes of stock picking, market timing, performance chasing, and paying too much in commissions and management costs that typically reduce investor returns.
After determining your risk tolerance, we then build a scientifically engineered portfolio containing appropriate market segments with dissimilar price movements - but that is only the beginning. Large amounts of research have indicated that Behavioral Finance - essentially an investor's ability to understand, feel confident in, and stick to an investment plan - is far more important than any other factor... especially in retirement.
We very carefully help YOU determine your true risk tolerance - not just how you might be feeling TODAY.
Most market moves are unpredictable - and successful investors are the ones who can stick to their investment policy despite the inevitable market gyrations which occur as a result of living in a globally linked world. Designing a portfolio which is too aggressive - which you abandon as soon as the market moves against you - only serves to make your journey more difficult. Conversely, allowing an investor to happily accept a portfolio which is not aggressive enough to meet their retirement needs is similarly unproductive. 'Going Broke Safely' is not an acceptable strategy for most people looking to retire.
We attempt to minimize unnecessary portfolio costs that result in disappointing returns.
Return-robbing costs come from active trading tactics that cause taxes, transaction costs, and higher than necessary expenses within portfolio components. This means that we will generally use ultra-low cost index funds and exchange-traded-funds (ETFs) whenever more expensive options do not appear to be able to predictably add value to a portfolio.
We proactively seek to maximize portfolio returns per unit of risk by properly selecting which market segments to include in the portfolio, and which segments to avoid. To this end, we perform continuous research and carefully observe our ever-changing political, economic and business cycles.
Finally, we seek to avoid losing money!
The cause of major market dips, such as the ones that occurred in 2000 and 2008, is the appearance of an economic recession. While we agree with most research that suggests "timing the market" is virtually impossible - we feel that most advisors take this rudimentary research too far, and do not fully understand the dangers of retirees remaining fully invested during recessions. It is our belief (as well as our observation) that by paying close attention to prevailing economic conditions and leading economic indicators, it IS possible to avoid significant market downturns as a result of recession onset. Recessions actually occur rather infrequently. We subscribe to multiple data sources and recession prediction models that allow us to understand the true numbers behind the news, so as to avoid unnecessary trading when political unrest or bad news (i.e., non-recessionary news) occurs - but also to rapidly adjust client portfolios to defensive positioning when recessions appear to be imminent.
All client assets are invested ONLY with qualified custodians - national firms that provide trading, custody, and brokerage services to registered investment advisors, trust institutions, and third party administrators. Currently, PARAGON is able to offer our client institutional-level brokerage accounts with both Fidelity Institutional Wealth Services, and with TD Ameritrade Institutional. Both custodians meet strict regulatory guidelines, have acceptable trading policies, have maximum investor protections under the Securities Investor Protection Corporation (SIPC), and offer significant institutional pricing discounts for our PARAGON clients that individuals are unable to negotiate on their own. PARAGON never accepts custody of client money or securities, clients receive monthly statements directly from their custodian, and clients are able to view their accounts and the securities that they contain 24 hours per day, 7 days per week, by logging in to their respective custodian's secure websites.
Our Strategies Are Based Upon 3 Components
Three Factor Model
Kenneth French and Eugene Fama's research determined which sources of risk the markets systematically reward with higher returns. By utilizing this research, we believe it is possible to 1) identify which market segments should be held, and which should generally be avoided or underweighted, and 2) calculate an expected return in a portfolio that is to be held over a reasonably long period of time. Click here to see more information on the Three Factor Model.
Efficient Market Hypothesis
With modern technology, today's markets are generally efficient at setting proper prices. Rarely do stock-picking money managers outperform their market segments for very long - especially without incurring more risk. Even more difficult is trying to pick those managers who may outperform - in advance. Investors enjoy far higher success rates by owning investments that seek to capture the entire returns of each market segment - at the lowest possible cost, and with the least tax impact. Generally, this means that we try to avoid high-cost, high-turnover mutual funds or investment strategies. We do, however, make changes in our portfolios as markets and economic cycles change.
Modern Portfolio Theory
MPT is a Nobel-Prize winning investment theory which allows investors to construct portfolios designed to maximize their expected returns for their specific risk preference. PARAGON portfolios typically use anywhere from 8-20 different asset classes, depending upon a client's risk tolerance. A detailed overview of Modern Portfolio Theory can be found here.
Certified Financial Planner Board of Standards Inc. owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™ and federally registered CFP (with flame logo) in the U.S., which it awards to individuals who successfully complete CFP Board's initial and ongoing certification requirements.
Investment Advisory Services Provided by Paragon Wealth Strategies, LLC, a registered investment adviser.