ANOTHER GREAT YEAR
In 2003, when I created the Gone Fishin' Portfolio – the most conservative portfolio in The Oxford Communiqué – I asked Members 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 18-year track record attests – 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 can be sure what will happen to the global 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, the Gone Fishin' strategy makes it our friend.
We capitalize on uncertainty by dividing the portfolio among 10 noncorrelated asset classes – represented by low-cost mutual funds or exchange-traded funds (ETFs) – that reflect our Oxford asset allocation model.
Once the portfolio is set up, you simply take 20 minutes a year to rebalance it. (That means returning the portfolio to the original asset allocation once every 12 months.)
The rest of the time you are free 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 12.8%.
That's slightly less than the S&P 500 returned in 2020. But this portfolio is far more conservative than an all-stock portfolio.
Thirty percent is in bonds and inflation-adjusted Treasurys.
The Gone Fishin' Portfolio also has substantial exposure to international markets that have 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 $468,446 at the end of 2020.
(These figures are net of all costs and can be verified using the mutual fund and ETF performance.)
In short, the Gone Fishin' Portfolio allows you to manage your serious money in a serious way. It – or something very much like it – should form the foundation of your investment program.
Why would you use it? Because it eliminates the six major investment risks:
- It keeps you from being so conservative that your purchasing power fails to keep up with inflation.
- It prevents you from being so aggressive that your portfolio goes up in flames.
- 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.)
- It overcomes delegation risk. You manage this portfolio yourself, so no one can mismanage your money, run away with it or siphon off an ocean of fees.
- 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 this strategy (or any of my investment strategies, for that matter).
- It eliminates wasted time and effort. While others spend countless hours evaluating market trends, financial advisors or competing theories about the future, you'll have gone fishin' instead
Give full consideration to that last point.
Your most valuable asset is not your home, your bank account or your investment portfolio.
It's the time you have left on this little blue ball.
The Gone Fishin' Portfolio gives you a high probability of increasing your net worth. But it guarantees you more time with the people and pastimes you love.
Perhaps that is what recommends it most.