The Gone Fishin' Portfolio
Buy the Book

Another Fine Year for Our Gone Fishin’ Portfolio

Alexander Green, Chief Investment Strategist, The Oxford Club

In 2003, when I created The Gone Fishin’ Portfolio - the most conservative portfolio in The Oxford Communiqué - I asked readers a serious question:

If I could show you a way to manage your money yourself, using a strategy as powerful and effective as any used by the nation’s top financial institutions... that will allow you to outperform the vast majority of investment professionals... that imposes zero sales charges, brokerage fees or commissions...  that takes less than 20 minutes a year to implement... and is based on an investment strategy so sophisticated it won the Nobel Prize in economics, would you be interested?

The answer was a resounding “Yes!”

(My book on the subject - out just a few years later - became an immediate New York Times bestseller.)

The Gone Fishin’ Portfolio is a battle-tested strategy built on the most advanced principles of money management. And - as its 17-year track record amply demonstrates - it works.

At its foundation is the only realistic premise for an investment program: that, to a great extent, the future is unknowable.

No one knows with any certainty what will happen to the economy, interest rates, the dollar or world stock markets each year - or even each decade.

(The S&P 500, for instance, delivered a negative total return from January 2000 through December 2009.)

Rather than pretend that we have a system that eliminates uncertainty, this strategy makes it our friend.

We capitalize on uncertainty by dividing the portfolio among 10 non-correlated asset classes - represented by 10 different ultra-low-cost Vanguard funds or ETFs - that reflect our Oxford Asset Allocation Model.

Once the portfolio is set up, you simply take 20 minutes a year to rebalance it.

The rest of the time you are encouraged to “go fishin’,” whether you define that as golf, travel, time with the grandkids or actually casting a line somewhere.

Last year the portfolio - with dividends reinvested - returned 20.4%.

That’s less than the S&P 500 returned in 2019. But this portfolio is far more conservative than an all-stock portfolio.

Thirty percent is in high-grade bonds, high-yield bonds and inflation-adjusted Treasurys.

The Gone Fishin’ Portfolio also has substantial exposure to international markets that have dramatically underperformed the U.S. market over the last decade.

Yet, if history is any guide, they will almost certainly outperform again in the future.

An investment of $100,000 in the Gone Fishin’ Portfolio in January 2003 - with dividends reinvested - was worth $415,215 at the end of 2019.

(These figures are net of all costs and can be verified using Vanguard’s own numbers.)

I have changed nothing about the make-up of the portfolio since its creation in 2003.

However, 5% of it is devoted to gold-mining and precious metals shares. And in September 2018, Vanguard changed both the name and the objective of its Precious Metals and Mining Fund(VGPMX).

It became the Vanguard Global Capital Cycles Fund.

While the fund still invests in commodity-oriented industries and the natural resource sector, it also focuses on companies that own infrastructure assets, primarily in telecommunications and utilities.

That change made it impossible to follow our asset allocation model and stick entirely to Vanguard mutual funds.

So we have substituted the VanEck Vectors Gold Miners ETF(NYSE: GDX) to stick with that original asset allocation.

Nine Vanguard funds and an ETF are certainly less elegant than 10 Vanguard funds.

But Vanguard has left us with no other choice since it changed the fund’s objective.

We also have a long-time ETF version of this portfolio and its long-term returns, as you’d expect, are virtually identical.

In short, The Gone Fishin’ Portfolio allows you to manage your serious money in a serious way. It - or something much like it - should form the foundation of your investment program.

Why would you use it? Because it eliminates the six major investment risks:

  1. It keeps you from being so conservative that your purchasing power fails to keep up with inflation.
  2. It prevents you from getting too aggressive, so your portfolio won’t go up in flames.
  3. It eliminates individual security risk. Since every investment is a diversified fund there is no chance of a single security - think Enron or Lehman Brothers - causing your portfolio to crater.
  4. It overcomes delegation risk. Since you manage the portfolio yourself, no one can mismanage your money, run off with it or siphon off an ocean of fees.
  5. It eliminates economic forecasting and market timing. Since these can’t be done accurately and consistently - and therefore don’t add value - they are no part of the strategy.
  6. It eliminates wasted time and effort. While others spend hours each year evaluating market trends, financial advisors and competing theories about the future, you’ll have gone fishin’ instead.

Give full consideration to this last point.

Your most valuable asset is not your home, your bank account, your investment portfolio or your gold and silver coins.

It’s the amount of time you have left on this little blue ball.

The Gone Fishin’ Portfolio will give you a high probability of increasing your net worth. But it guarantees you more time to devote to the people and pastimes you love.

Perhaps that is what recommends it most.

Good investing,

Alex