Book Review: The Gone Fishin' Portfolio by Alexander Green

Today's book review is The Gone Fishin' Portfolio by Alexander Green. Mr. Green is the investment Director of The Oxford Club, as well as Chairman of Investment U.

The Gone Fishin' Portfolio is a clear and concise read. It is written for the individual investor who has limited to moderate financial knowledge. And lets face it, this is a huge audience. He says it best in the introduction, "No one cares more about your money than you do." Its a simple sentence, but its so true.

The book is broken down into three parts: 1) Get Wise; 2) Get Wealthy; and 3) Get On With Your Life.

It starts with why you should handle your own investments. It takes a simple look at items like compound interest and the power of investing over time. When looking for investment advice, he recommends Peter Lynch, John Templeton, and Warren Buffett. This outlines the idea that you can handle your own investments, and that you should.

Green, like many others, is a believer in the long-term value of common stocks. Throughout history, they have been the strongest investment for not only outpacing inflation, but providing real capital gains to investors. To help show the long-term value of stocks, he quotes Jeremy Siegel's Stocks for the Long Run, and says:

What he [Siegel] discovered is dramatic: $1 invested in gold in 1802 was worth $32.84 at the end of 2006. The same dollar invested in T-bills would have grown to $5,061. $1 invested in bonds would be worth $18,235. And $1 invested in common stocks with dividends reinvested--drum roll, please--is worth $12.7 million.

After showing of the long-term value of stocks, he puts forth ways to invest in them. Mutual funds are the most common way, and can have great success. But many funds are taking away from performance by charging too much in fees. This is why he recommends index funds, and specifically Vanguard, which is the industry standard for low-cost funds. He introduces the history of Vanguard, and the basis for its lowest-in-the-industry fee structure.

The plan itself is a fairly basic mix of diversified holdings. You buy a combination of the funds mentioned, and that will vary based on your age and risk tolerance. Once a year, you should re-balance your portfolio to meet your percentages in each fund.

Sounds simple? It should. This is about taking control of your own finances, but not letting it take control of your life. This theme should connect with a lot of middle class investors that have become disillusioned by what has happened on Wall Street in the past year.

His advice is straightforward. Trust this proven plan, and give it time to work. There are times when market hysteria tempts investors to chase speculative stocks, and there are times when fear tempts investors to sell out. Both of these emotions should be avoided. Having a plan will allow you to avoid these temptations.

In my opinion, this book accomplishes a lot. Almost anyone can read and understand it, and use it. It doesn't outline risky formulas or plans that need to be monitored daily. It allows investors to avoid unnecessary risks like trying to time the market or the risk of holding individual stocks. It is a simple program for people who don't want to hand their money over to an expensive broker, but still want an effective investment process. Although "buy and hold" and indexing has taken a lot of heat with the market underperforming over the past decade, I think Green still makes a legit case for this investment plan.

This book is available from Agora Book Publishing.

Comments

[Roger Knights:]

"Green, like many others, is a believer in the long-term value of common stocks. Throughout history, they have been the strongest investment ..."

It works until it doesn't.

May 07 11:27 AM

[whidbey:]

Did he say anything about a bond portfolio?

Some (maybe me too) are saying the man from Wharton is wrong about Stocks for the Long run. My take after looking at the data available is that a good case can be made for bonds. Nothing is fool proof if a recession coincides with your retirement date.

Thanks, I like your work.

Jul 19 06:04 PM

[Michael Brisky:]

He includes bonds into the actual Gone Fishin' portfolio itself.

-10% Inflation-Adjusted Bonds
-10% High-Grade Bonds
-10% High-Yield Bonds

He does go into depth on each of these, and I particularly enjoyed his section on high yield bonds (its just a page or two).

Overall, its a pretty basic, but solid portfolio for the average investor. Its important to keep costs low, and Vanguard is the best for that.


On Jul 19 06:04 PM whidbey wrote:

> Did he say anything about a bond portfolio?
>
> Some (maybe me too) are saying the man from Wharton is wrong about
> Stocks for the Long run. My take after looking at the data available
> is that a good case can be made for bonds. Nothing is fool proof
> if a recession coincides with your retirement date.
>
> Thanks, I like your work.

Jul 20 01:03 PM