by David Young, President

It has been quite the year. It is a good thing that we don’t believe in forecasts. I’ve written a lot about how often most market forecasts are wrong. I regularly mock the talking heads in the media because they are consistently wrong with their projections. You would think they would stop predicting the future at some point, but that never seems to happen.

At the beginning of the year, almost everyone was predicting a recession. It made sense that the highest inflation and fastest interest rate increases in 40 years would devastate our economy. The debate was whether the recession would be mild or severe. In the end, the recession never came. There was too much government money (Trillions of dollars in the name of COVID-19) floating around in the economy, holding it up. In the short term, that wound up helping stocks.

During the year, we went through a regional banking crisis that took out Silicon Valley Bank. The war in Ukraine continued while another fight broke out in the Middle East. These significant issues would take the steam out of the stock market.

Through it all, the S&P 500 finished the year up 26.2%. For perspective, that is barely below its January 2022 record.

The Dow Industrials gained 16% and hit a record of just over 37,000 with seven new highs to close out 2023. Big Tech and Artificial Intelligence took the NASDAQ up 43%, which was impressive.

The most substantial part of the market was the technology stocks known as the Magnificent Seven (Apple, Nvidia, Alphabet, Amazon, Tesla, Microsoft, and Meta). They fueled much of the year’s gains, powering the Nasdaq Composite up 54.9%, its best year since 2020.

The S&P 500, with 30% comprised of these seven stocks, posted a 26.2% gain and ended within striking distance of an all-time high. The domination of these large stocks in the key indexes shows how our former free-market economy is turning into a market of monopolies.

Paragon Portfolios

“Conservative” bonds were all over the place in 2023! The 10-year Treasury yield started the year at 3.88% and rose to nearly 5% in mid-October. At that point, because they move inversely, long-term government bonds were down 13%. Around October 20, rates began to fall, and bonds rallied over the next two months—all of the bonds that had been down ended the year in the plus column.

After all the back and forth in interest rates, we were happy that our conservative portfolio, Managed Income, closed the year up 4.2% net of fees.

Our Top Flight portfolio put in a strong performance on the growth side. It generated a total return of 29.2% net of all fees versus 26.3% for the S&P 500. From its inception in Jan. 1998, Top Flight has generated a total return of 1527% versus 695% for the S&P 500, net of all fees.

Hunting For True Wealth

As I mentioned in last quarter’s newsletter, I’m excited to share that my book, Hunting for True Wealth, will officially launch on January 24, 2024.

I started this investment company in 1986. My father-in-law was my first client 38 years ago. That means I’ve been doing this for a long time.

In my spare time, of which I have very little, I’ve always loved spending time in the backcountry—hiking, backpacking, packing with llamas, and hunting big game.

This hobby has taken me into the backcountry for over a thousand nights. As long as I was there, I began hunting for giant trophy animals. I’ve even made it into the Safari Club and Boone and Crockett record books with several animals, including the third largest elk in the world, taken with a muzzleloader rifle, and the sixth largest Rocky Mountain goat in the world, taken with a traditional rifle. I’ve also taken the second largest antelope in Utah with a bow.

I tell you about these trophy-winning experiences not to brag, but to spark your interest in my book. The stories I share aren’t about typical hunting experiences. Instead, I take you on extreme, big game hunts to Alaska, Alberta, British Columbia, Utah, Colorado, Idaho, New Mexico, Nevada, Botswana, and Zimbabwe. Some of my trips are real nail-biters!

During these seven to fourteen-day hunts, I’ve had a lot of time to pause and reflect. Over time, it became apparent to me that the reason I enjoyed hunting so much was that the challenges and rewards of a hunt have many parallels with investing. I’d find myself telling stories to family, friends, employees, and clients that tied lessons I’d learned while hunting into my investing advice and experience—and vice versa.

Then, as I thought about it further, I realized I had spent a lifetime helping people build financial wealth that has helped my clients stabilize their lives and has blessed them in many ways. However, that also led me to ask, “Does financial wealth bring my clients true wealth?” Meaning, does their financial success lead them to internal fulfillment and happiness?

Because I’ve worked with clients to manage their money for 38 years now, I’ve seen the limits of financial wealth on people’s experience of happiness. In Hunting for True Wealth, I combine the lessons I’ve learned from my extreme hunting experiences with the lessons I’ve learned about building financial wealth, sharing five principles I’ve developed to help people achieve both financial and what I call “true wealth” in their lives.

As long-term clients, I consider most of you to be good friends. We’ve been together for a long time, so I want to give each of you a copy of my book. Much of my foundational investment knowledge is contained in this book. I believe you’ll enjoy it more than most people since you know who I am. We’ve been on an investment journey together for 10, 20, and 30-plus years.

I hope you read and enjoy the book I’ll send you. I’d also really appreciate your help getting the word out about the book.

How You Can Help

Step 1:  Read Hunting for True Wealth, which we will send you soon. I’ve heard from early readers that it’s very entertaining and offers valuable lessons about how to achieve true wealth. I think you’ll enjoy it!

Step 2: On launch day, Wednesday, January 24, 2024, purchase a digital or print copy of the book online and give the book to someone you think would like it. When you buy any version of the book (hardback, paperback, or ebook), you’ll qualify to write a brief review on Amazon as a “verified purchaser.” Your review will help people know what you got out of reading the book. Buying on January 24 also really helps our launch-day numbers.

Step 3: After buying the book on Amazon, you’ll go to the book’s review section and write a review of my book. Be honest and let people know what you think.

Also, please reach out to me at dave@paragonwealth.com and let me know what you think about the book. I’m curious, and I do appreciate your help!

As I always say, knowing that you’ve chosen us as your financial advisor is a privilege. If you need anything or have any questions, please get in touch with me or any of our team members. We are always here to help however we can.

Thank you for the trust you have placed in us. Have a great year!