Customer Reviews

The Gone Fishin' Portfolio: Get Wise, Get Wealthy...and Get on With Your Life (Agora Series)

5 star:		(53)
4 star:		(24)
3 star:		(8)
2 star:		(5)
1 star:		(3)

 

 

I just finished reading this book and thought it was pretty good overall. However, as an experienced investor, I know that there are no magic bullets in investing. The book shows performance of the portfolio over the past seven or so years. In those years, the S&P 500 (domestic stocks) performed rather poorly while gold, other commodities, real estate and foreign investments did exceedingly well. This portfolio stays invested at all times in all of these asset classes.

I took the liberty of backtesting the same portfolio for the ten years preceeding the 2000's, and the S&P 500 way outperformed this portfolio. This did not surprise me given the fact that we were in a full blown bull market. Those other asset classes underperformed, some badly.

I think that the Gone Fishin Portfolio will perform relatively well in more uncertain markets. However, I am not convinced that will happen when the domestic markets rally strongly.

My point here is that the oversimplification will lure rookie investors into a false sense of security.

I am sorry, but even if you are using a broadly diversified portfolio of mutual funds or ETF's, you must pay attention and understand the weakness of such a simplified approach. You will have to spend more time on your portfolio than 20 minutes a year.

Like so many business books, this book could be condensed into a single page. Here are some of the key bullet points:
* Save more money. i.e. stop drinking starbucks coffee everyday.
* Expect to be able to withdraw 4% of your assets annually after you retire i.e. you need $1 million to generate $40,000 a year in pre-tax income. Some people would say withdrawing 3% would be more conservative.
* Perform asset allocation across 10 Vanguard (index) funds (low cost)as follows: 15% VTSMX; 15% NAESX; 10% VEIEX; 10% VEURX; 10% VPACX; 10% VWEHX; 10% VFSTX; 10% VIPSX; 5% VGSIX; 5% VGPMX.
* This represents a 70% stock, 30% bond portfolio with heavy international slant
* Re-balance every 12-18 months
* Don't use brokers/investment advisors with their 1%+ annual fee
* Don't try to time the market

Good advice. Now how is the portfolio doing? From January 2, 2008 to August 9, 2009, it is down 23.25%. How is that doing relative to a 70% stock 30% bond portfolio (in the case of 70% VTSMX and 30% VIPSX), that would have returned -23.67%. You'd have to compare risk in the portfolio, but I suspect that you'd find that the "Going Fishin'" portfolio will deliver you a basic risk adjusted market return. Nothing fancy. We're not talking endowment fund returns.

[...] [...] [...] What readers should really care about is, if I took the [...] advice, how would I have done. And the answer is - same as any portfolio with similar risk and reasonable diversification. That's not a negative, it just does not live up to any hype.

Why?

Recently I sold my business, or as the financial community would have it, I experienced a "liquidity event".

The proceeds of the deal now need to be cleverly invested. But what I really want to do is master the art of fly fishing. This seems a lot more enticing than delving into the intricacies of correlation, beta, derivatives, hedge funds, ETFs, active management etc etc etc.

Otherwise stated, going after that lunker rainbow seems a lot more engaging than the quest for the evanescent and elusive alpha.

Enter author Alexander Green and The Gone Fishin' Portfolio. His premise (promise?): a proven method to manage your own money in twenty minutes per year and outperform the great majority of highly compensated managers.

Sound preposterous? Maybe, but after reading The Gone Fishin' Portfolio I'm considering giving it a whirl.

The first part of the book (Get Wise) presents straightforward principles about money and investing. Some examples -

* "Unlike the performance of the stock market, saving is something that is under your control".

* "In most walks of life you get what you pay for. This is emphatically not the case with investment advisors".

* "Experience tells us that it's humility - not superior knowledge - that paves the way to successful investing".

In Part 2 (Get Wealthy) Green talks about long term equity investment and the pitfalls of attempting to time the market. He then debunks active management, making the case that after fees and expenses the great majority of managers fail to match the performance of the overall market. This sets the stage for a discussion of index funds as a low cost, tax efficient approach to equity investing.

Next the author details the Gone Fishing Portfolio itself - an asset allocation of index funds covering domestic and international stocks, various categories of bonds, as well as real estate and gold mining shares as alternative investments.

What about the twenty minutes per year? That's the time it takes to rebalance the portfolio, making sure that the percentages devoted to each asset class remain consistent over time. This simple process makes great sense. It forces the discipline to buy low and sell high. That's because the assets that will be sold in the course of rebalancing are those that have appreciated in value while those that are bought (to bring their value up to that required percentage of the total) will typically be those that have declined.

Simple but powerful principles.

In Part 3 (Get On With Your Life) the author talks about just that. He reminds us of what's really important, writing, "Time, not money, is your most precious resource. It is perishable, irreplaceable, and, unlike money, cannot be saved. The beauty of the Gone Fishin' Portfolio is that it allows you to redirect your time to high-value activities, whether it's work you enjoy, time spent pursuing your favorite activities, or just relaxing with your friends and family".

OK. That's what I needed to hear. To quote our President, "Bring 'em on" (the trout that is).

Aside from the book being readable and enjoyable, it finally does what no other investment books do... tell you what to do!

Instead of complex formulas and vague recommendations, this book shows you exactly what to invest in and in what amounts. It's a portfolio that will work for 99% of investors. Of course it also explains why this portfolio works and proves how the portfolio beat the market in good times and bad.

When just a few percentage points of extra return can completely alter your retirement, it's important to manager your portfolio properly without sending half of it to your financial adviser. And this book shows exactly how. One of the best and most direct investment books available.

As you can see from the data below, this is a robust strategy that anyone could adopt despite the fact that it is experiencing a down year so far in 2008. From the beginning of 1997 until 8/8/2008, Green's Gone Fishin Portfolio (GFP) strategy enjoyed a cumulative compounded return of 221.58 percent versus the dismal return of 49.36 percent for the S&P 500 index. That translates into a 10.53 percent annual rate in a period when the S&P 500 compounded at 3.49 percent.

Unfortunately, most investors, whether experienced pros or the greenest of neophytes, would likely have discarded this strategy during its first period of underperformance. Sadly, this is the case because we all tend to forget that excellent investing returns--even Warren Buffett's--are generated over long periods of time that include lots of gyrations and volatility.

So, I would encourage you to consider this strategy with its above average market returns and far lower volatility. The rationale for the average star rating is because of the amount of filler that is included in the book.

P.S. At the very least we should all follow his advice to save more money!


Gone Fishin with Vanguard

Start Date: 1/1/1997 Index: ^GSPC
End Date: 8/8/2008 Signal Generator: LTBH

Years GFP S&P 500
1997 23.69% 31.01%
1998 2.94% 26.67%
1999 27.02% 19.53%
2000 -2.42% -10.14%
2001 6.90% -13.04%
2002 -2.97% -23.37%
2003 31.40% 26.38%
2004 11.98% 8.99%
2005 12.63% 3.00%
2006 17.02% 13.62%
2007 14.59% 3.53%
2008 -11.61% -24.65%



Month GFP S&P 500
January 0.81% 0.24%
Februar 1.17% -1.09%
March 1.29% 0.86%
April 0.76% 1.98%
May 0.76% 0.78%
June 0.81% -0.09%
July -0.54% -0.75%
August 0.15% -1.50%
Septemb 1.70% -0.85%
October 0.35% 2.78%
Novembe 1.67% 2.08%
Decembe 2.32% 1.52%

Mr. Green has boiled profitable long-term investing down to a 20-minute annual exercise. And his recommended portfolio beats the market in good AND bad times. (The proof is all there.) The portfolio will not only diversify you into stocks and bonds, it will diversify you among all the major asset classes - gold, U.S. stocks, Treasuries, foreign stocks, etc. - which, as he explains, is where the magic is. He'll show you how much (in percentage terms) of your nest egg to put in each asset... as well as the specific investment to buy to get exposure to each one. (You'll also cut your investment costs by a wide margin, which really adds up.)

I've read Graham's Intelligent Investor and Security Analysis - both classics, and incredible guides on managing risk. But The Gone Fishin' Portfolio, which also, incredibly, minimizes your risk and increases your total return, tells you specifically what to buy - something you just can't get out of the classics. (Green's investments will still work 40 years from now - a true "set and forget" portfolio.) I've ordered a copy for my God daughter AND my parents... and I'm recommending it to all of my friends who still think they can beat the market willy nilly. A must read, for sure.

I pre-ordered my copy and I'm so glad I did. As a long time reader of Alex Green's newsletters, I knew it would be a good read and I wasn't disappointed.

Finally, a Wall Street veteran lets us in on the truth of how most investment banks really operate: Stockbrokers are better salespeople than investment advisors.

Brokers trade for commissions, insurance agents sell some of the highest-cost products in the industry, and even planners will convert a substantial portion of *your* assets into *their* assets. I've worked in financial services for years and it's pretty scary to think a 23-year old kid without much more than a Series 7 license can make investment decisions for clients!

This book draws on ideas from the philosophies of the top investors of all time - Peter Lynch, John Templeton, and Warren Buffet. They might have different investments styles, but in the end, none of them were market timers or forecasters. Alex Green repeatedly stresses the mistake of trying to time the market. And he's right.

Buy this book and take charge of your own financial future, while avoiding all the mistakes so many first-time online "day-traders" make.

Kudos to Mr. Green for exposing Wall Street in the book. I've had a feeling for years that the system is rigged against Ordinary Joe investor, but now I have proof from a Wall Street veteran. The strategy in the book -- which has beaten the market for years -- is simple, yet precise. But the best part is that Mr. Green tells you, very specifically, what to invest in! Tell me the last time you've read an investment books that does that.

I'm pretty much a "beginner" when it comes to investing, and before I read Alexander Green's book and I was considering getting someone to manage my money and make investments for me. But I decided to read this book first, and I'm definitely glad I did! Now I'll never let anyone but me touch my money. This book gave me the confidence to do my own investing...and his way I only have to spend 20 minutes a year doing it!

The strategy is based on one that won the Nobel Prize for economics. It's a great read for investors of any age, those just starting out to those ready for retirement. It's an easy, straightforward read, definitely not boring, and the best part is, it's refreshingly honest. Not like so many of those other "get rich quick" type books out there. Alexander Green really cares about the readers. And instead of just going on and on about vague ideas, he actually tells you what to do and how to do it (I've tried it and it works). I've read quite a few investing books and know its rare to get such simple, step by step instructions that actually pay off like The Gone Fishin' Portfolio does.

Just finished reading this book. It's tremendous. If you have a 401K, retirement account of any kind, or just like to trade stocks, you'll definitely love it. The writer Alexander Green first tells you how the big Wall Street banks are screwing the little guy left and right and then shows you the perfect antidote - the details of his proprietary portfolio. It's pretty fascinating stuff - he shows you right where to put your money, and shows you how to do it in 20 minutes a year. The track record goes back eight years and it has doubled the markets every year pretty much from the data given. Even if you don't use the exact portfolio these ideas seem like they can make you and save you a lot of money. You'll never have to pay another mutual fund fee, for example!