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).
