Opinions Requested on The Gone Fishin' Portfolio

[CoolChange]

I recently read The Gone Fishin' Portfolio by Alexander Green (ISBN #9780470112670) and discovered that he and I have come to very similar conclusions about investing. This is not terribly surprising since he references much of the research that had already convinced me that asset allocation with occasional re-balancing is the best approach for the majority of my assets.

Now, I am considering recommending this specific book to all of my friends and family who ask me about investing, money management, etc. and then loose interest 30 seconds into any discussion on these topics. (I'm planning to say something along the lines of: I'd love to help; but, this book does a much better job than I ever could.)

However, before I do this, I was hoping to solicit some other opinions about this this book (and my plan) if anyone on here has read it. Personally, I think this book strikes a good balance: Not too elementry but no real math skills needed to understand it either. And, it gives extremely specific recomendations about implementation.

For anyone interested in the Cliff Notes version, the following link contains the specific Vanguard portfolio that the book recomends for use with a Vanguard account: The Gone Fishin' Portfolio |

I found another page with results of this portfolio vs. the S&P 500 for [FONT=Verdana, Arial, Helvetica, sans-serif]2000-[/FONT][FONT=Verdana, Arial, Helvetica, sans-serif]2007: [/FONT]http://www.dailywealth.com/archive/2008/apr/2008_apr_25.asp I am planning to calculate the 2008 return myself since I did not find it online; but, I have not gotten around to that yet.

While this is not a completely traditional asset allocation, it does make sense to me. And, I am probably going to move toward something similar myself using ETF's and a WellsTrade Account. (I have let my own allocation get very skewed over the last few years; lukily for me, I have been cash heavy which has definitely helped blunt the blow of the last few months.)

Thank you.

 

[Grep]

I'd hardly call it a "Gone Fishin'" portfolio, but it's o.k. for someone who accepts that it's a bit aggressive compared to the market as a whole, such as being 70% stocks and tilted towards small-cap stocks and emerging markets. Note that 1/3 of the bond allocation is in high-yield, which is also a little aggressive.

If you were in this at the recent highs, you would have taken an out-sized beating in a number of areas, with little if anything that has done well to buffer that (so much for "Nobel Prize Committee approval!!!"). On the other hand, at this particularly-miserable moment in time, moving from cash into this allocation could pay off well in a recovery.

 

[Rich_by_the_Bay]

I happened to browse it this afternoon and found it to be pretty similar to the coffee-house and some of Burns' lazy portfolios.

I agree that it is reasonable, that it is diversified, and that I would skip the junk bonds altogether. Nothing dramatic to gain here, probably similar to a total stock/total bond mix with a small and value tilt..

 

[CoolChange]

Rich and Grep,

Thanks for the feedback. I will take another look at The Coffeehouse Investor and consider recommending that instead. I do remember it being much shorter and simpler with less aggressive allocations recommended; but, I don't remember it being quite as specific about implementation. It does look like a new edition is coming soon though.

Thank you again.

 

[Running_Man]

My calculations show this portfolio would have returned -30.71% in 2008 and -10.67 YTD as of yesterday. Total return from Jan 1, 2000 - Feb 23, 2009 1.6 percent annually.

Probably you'll see portfolios like this adjusted in a couple of years suggesting 10 percent long term treasuries and 10 percent intermediate term treasuries in place of holding some stock funds to go to a 50/50 allocation since that will back test better after the most recent results.

 

[Lusitan]

Wouldn't the ultimate "gone fishin" portfolio be a Target Retirement fund at Vanguard?

 

[Independent]

Have those "non-correlated" foreign stocks really turned out to be as non-correlated as people expected?

 

[Grep]

Bogle has frequently said that foreign stocks let you down just when you need them most. Be that as it may, Modern Portfolio Theory certainly has taken a thorough thrashing in the current debacle.

It's also increasingly unclear whether previously well-supported risk premiums, such as the small-cap premium, will survive now that they are being chased (in the recent past, at least) with such ardor. Taking on all the risk with none of the benefit is no fun.