jiyoung6059

8 Advantages of the Gone Fishin' Portfolio

These's a fair bit of hype with the Gone Fishin' Portfolio. I just got an email from Dr. Mark Skousen of Investment U./Oxford Club touting this book and portfolio. He purports to have "uncovered" favorable comments on this idea from the likes of Porter Stansberry, Steve S., Bill Bonner, etc.; in fact, these people all are part of the same organization and hype each others' newsletters, books, etc., without, of course, disclosing the relationship between them. More important, appropos of the GF portfolio, they tout the returns of the strategy from 2000 to date, but neglect to tell you what the returns would have been with a more complete investment record. I extended the hypothetical returns going back to 1993 using the same Vanguard funds A. Green recommends (and used an index to substitute for unavailable returns for Vanguard funds that haven't been around long enough). According to my calculations, the GF portfolio did indeed beat the S&P 500 every year from 1999 through 2007, but with an arithmetic average annual return of 11.89%, not the 17.3% they claim. BUT from 1993--as far back as I went--through 1998, the GF portfolio UNDERPERFORMED the SPX every year except for 1993 by an average of 9.43% per year!! Considering the entire 15 year period, the GF portfolio UNDERPERFORMED the S&P 500 by about 35 basis points per year on average. I haven't yet read Green's book, but it is suspicious that he seems to ignore the longer record which does not seem to indicate this strategy will beat an index portfolio. Finally, there's certainly nothing new or revolutionary in the GF approach--many books were written in past years espousing a similar strategy. To cite just one, "How to Retire Early and Live Well," by Gillette Edmunds (2000).