The Gone Fishin' Portfolio E-Book

Alexander Green

• Herausgeber: John Wiley & Sons
• Kategorie: Fachliteratur
• Serie: Agora Series
• Sprache: Englisch

Seitenzahl: 290

Veröffentlichungsjahr: 2008

Beschreibung

A timeless investment guide that reveals how to consistently earn market-beating returns while reducing risk What every investor needs is a battle-tested strategy that embraces the uncertainty of financial markets-and life in general. One that will yield market-beating portfolio returns in both good times and bad. The Gone Fishin' Portfolio shows you what that strategy is, how it works, and why you should begin using it immediately. The innovative approach outlined throughout these pages will help investors enjoy a notably high probability of success by using an investment strategy based on the notion that nobody knows what the market is likely to do next, which, in effect, allows investors to capitalize on uncertainty. * Details one of the safest and simplest ways to reach your long-term financial goals, and explores the financial and psychological challenges you're likely to face in the years ahead * The "Gone Fishin' Portfolio" is based on a Nobel Prize-winning investment strategy that takes just twenty minutes to implement * Discusses the relationship between risk and reward in financial markets, and reveals how the investment industry really works The Gone Fishin' Portfolio will allow you to reach your most important investment goals, beat Wall Street at its own game, and achieve the financial independence you deserve.

Leseprobe

Table of Contents

Title Page

Copyright Page

Dedication

Epigraph

Foreword

PREFACE

Acknowledgements

PART I - Get Wise

Introduction

CHAPTER 1 - The Unvarnished Truth About Your Money

LAY CLAIM TO WHAT’S YOURS

LEAVE NOTHING TO CHANCE

CHAPTER 2 - The First Step on the Road to Financial Freedom

SOMETIMES LESS IS MORE

A MATTER OF HOW WE VALUE THINGS

CHAPTER 3 - Why Manage Your Own Money?

LET THE BUYER BEWARE

A TRIO WORTH LISTENING TO

CHAPTER 4 - Know What You Don’t Know

NO, YOU DON’T

HUMILITY IS THE ONLY TRUE WISDOM

CERTAINTY—A FOOL’S PARADISE

PART II - Get Wealthy

CHAPTER 5 - Common Stocks

HISTORY DOESN’T LIE

DON’T GET CAUGHT ON THE SIDELINES

A REASON FOR OPTIMISM

USING THE PAST TO SAFEGUARD YOUR FUTURE

CHAPTER 6 - Don’t Buy What Wall Street Is Selling

THE MUTUAL FUND ADVANTAGE

THE WISER BET

THE LOW-FEE WAY TO BEAT THE STREET

LOWER COSTS/HIGHER RETURNS

A NEEDLESS DRAG ON PERFORMANCE

CHAPTER 7 - Your Single Most Important Investment Decision

SIX CRUCIAL FACTORS

IMPORTANCE OF THESE FACTORS IN THE GONE FISHIN’ PORTFOLIO

HIGHER RETURNS WITH LESS VOLATILITY

THE GONE FISHIN’ ASSET ALLOCATION MODEL

A NOBEL PRIZE-WINNING STRATEGY

THE BEAR MARKET PROTECTION KIT

CHAPTER 8 - The Gone Fishin’ Portfolio Unveiled

HOW TO PUT YOUR MONEY TO WORK

YOU MAY QUALIFY FOR EVEN LOWER COSTS

HOW TO KEEP YOUR PORTFOLIO ON TRACK

PUTTING THE GONE FISHIN’ PORTFOLIO TO THE TEST

A SIMPLE STRATEGY IN A COMPLEX WORLD

WHAT TO TELL THE NAYSAYERS

THERE IS ONLY ONE OBJECTIVE

UNDERSTAND THE GAME TO WIN IT

CHAPTER 9 - Why the Gone Fishin’ Portfolio Is Your Best Investment Plan

THE PLAN THAT OUTPERFORMS PROFESSIONAL MONEY MANAGERS

HERE TODAY, GONE THE NEXT

STICKING TO THE TRIED AND TRUE

CHAPTER 10 - How to Legally Stiff-Arm the IRS

PRE-TAX VS. POST-TAX RETURNS

THE TAXMAN COMETH

EVERYTHING IN ITS PLACE

CHAPTER 11 - The ETF Alternative

MUTUAL FUNDS THAT TRADE LIKE STOCKS

WEIGHING THE ADVANTAGES OF ETFS

THE GONE FISHIN’ PORTFOLIO 2.0

PART III - Get On with Your Life

CHAPTER 12 - The Last Two Essentials

TAKING AIM

FINDING THE BULL’S-EYE

HOW TO CALCULATE YOUR “NUMBER”

CHAPTER 13 - Your Most Precious Resource

THE KEY TO LONG-TERM INVESTMENT SUCCESS

A PLAN FOR ALL SEASONS

TIME IS ON YOUR SIDE

AFTERWORD

APPENDIX A - Vanguard Funds

APPENDIX B - ETFs

ABOUT THE AUTHOR

INDEX

Copyright © 2008 by Alexander Green. All rights reserved.

Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

Published simultaneously in Canada.

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Library of Congress Cataloging-in-Publication Data:Green, Alexander, 1958- The gone fishin’ portfolio : get wise, get wealthy-- and get on with your life / Alexander Green. p. cm. Includes index.

eISBN : 978-0-470-43772-8

1. Investments. 2. Portfolio management. 3. Finance, Personal. I. Title. HG4521.G693 2008 332.6—dc22 2008017690

This book is dedicated to Judith and Braxton Green. If there is one thingI know how to do, it’s pick the right parents.

If a man writes a book, let him set down only what he knows. I have guesses enough of my own.

Johann Wolfgang von Goethe

FOREWORD

You have no idea what good hands you’re in. I do . . .

You see, at this point I’m now one of the world’s most widely read investment analysts. I’m not quite sure how I got here. I don’t have a gimmick. I don’t promise zillion-percent returns overnight. I think I’m here because I’ve given consistently good advice over my career.

One of the best pieces of advice I can give you today is this: Listen to Alex Green.

I know that Alex Green is better than I am at what I do. Darn it, the guy always has been.

I started out in the business as an investment advisor. Alex worked at the same firm. It was obvious why people trusted him with their life’s savings, and why, too, he was in a league of his own.

You see, Alex has an extraordinary ability to see an investment idea before anyone else. And he combines that with another extraordinary ability—he can communicate complicated investment ideas in plain language.

Sometimes I’d sit in his office and just listen to him talk to his clients. I’d go back to my desk inspired and try to emulate him. But I couldn’t come close.

I concluded that Alex’s brain somehow works a hair quicker than even the smartest of us.

I’ve accomplished everything you can in the investment world. I’ve got a Ph.D. in this stuff, I’ve worked for a billion-dollar New York hedge fund, and I’ve literally traveled the world sizing up investments—going to places as extreme as Iceland and Ecuador, and discovering big opportunities. Today, hundreds of thousands of people rely on my investment advice. And I’m confident I’m good at what I do.

I know I’m smart. I know I make consistently good decisions. But my experience is, Alex Green is one step ahead of me.

How does he do it? I don’t know. And it all looks so easy too . . . because it is for him. He just loves to soak everything up. But the nice thing about Alex is, none of this goes to his head.

This book, The Gone Fishin’ Portfolio, is classic Alex. Since it’s his first book, the temptation had to be great for him to dazzle you with all he knows. Instead, he took the opposite approach.

He clearly asked himself, “What is the simplest, most useful piece of investment advice I can share with a wide audience of investors?”

The answer is what you have in your hands right now.

In my view, most of the books in the investment section of your local bookstore are garbage. They’re either too simplistic or too pie-in-the-sky. More often than not, you finish them and ask yourself, “Now what do I do?”

This book is different—and rare. It provides a simple but sophisticated strategy that actually works, written in plain language, by a brilliant investor.

And you won’t wonder what to do. He tells you what to do, very specifically. He shows you exactly where to put your money and in what percentages. He also tells you what you need to do to keep your portfolio on track. It takes only a few minutes a year. What’s not to like?

When I say you are in good hands with Alex Green, I’m saying it from deep down in my toes. I don’t offer up praise lightly. But I have known him for over 15 years, and I can confidently say that Alex is as smart an investor as you’ll ever find.

If you want to make more money safely from your investments, you really can’t do better than Alex Green. Believe me; I’ve tried.

DR. STEVE SJUGGERUD Editor, True WealthApril 24, 2008 St. Helier, New Jersey

PREFACE

In July 2001, I retired from the securities industry at the ripe old age of 43. After 16 years as an investment advisor, research analyst, and portfolio manager, I had gone from a net worth of approximately zero to financial independence.

I was now free to do whatever I wanted, wherever I wanted, with whomever I wanted. It’s called total financial freedom. And I can tell you from experience, it’s a great feeling.

Unfortunately, many of my clients had not become financially independent. This was not because I advised them poorly. As an investment advisor, I dealt with my clients honestly and gave them the best advice and service I could.

Yet, in many ways, they operated at a disadvantage. Some clients had a poor understanding of investment fundamentals. Others found it impossible to commit to a long-term investment plan. Many were simply too emotional about the markets, running to cash at the first hint of danger.

Contrarian instincts are rare, too, I learned. Few people are emotionally stirred by low stock prices. But I am one of them. Every time there was a correction, a crash, or financial panic, my Scottish blood would surge, my pulse would rise, I’d rub my hands together, and start buying.

My clients often did just the opposite. They were more inclined to curse loudly, sleep little, and hurl epithets, some unrepeatable. Unfortunately, strong emotions like these are often a prelude to bad investment decisions.

Then there was the other small matter of my firm’s fee schedule. Investment professionals don’t get into the industry because the work is meaningful but low paying. You become a broker, a financial planner, an insurance agent, or a money manager to get rich. And most of us do, eventually. In truth, what you’re paying your financial advisor is probably too much. Many investors aren’t doing that well because their advisor is doing too well.

This story is as old as Wall Street itself. In his book Where Are the Customers’ Yachts?, originally published in 1940, Fred Schwed Jr. tells the story of a visitor to New York who is taken to the harbor and shown the impressive yachts that belong to the bankers and brokers. A tad naive, the visitor asks, “but where are the customers’ yachts?”

Where indeed.

I’m not suggesting this is all Wall Street’s fault. Clients are rarely abducted and forced at gunpoint to sign account-opening forms. Nor can advisors make important investment decisions without their clients’ consent (not without landing in the hoosegow, anyway). We all need to take responsibility for the decisions we’ve made, including the decision to delegate important responsibilities.

Since retiring from life as a registered investment advisor seven years ago, I’ve been busy living what I call “the second half of my life.” I’ve been writing about the financial markets for Agora Publishing, the world’s largest publisher of investment letters.

Currently, I am the investment director of The Oxford Club, the world’s largest financial fellowship with over 70,000 members. I am also chairman of Investment U, an Internet-based investment research service with over 300,000 subscribers. (As a sideline, I also write SpiritualWealth, a twice-weekly e-letter dedicated to ideas about how to live a richer, more meaningful life Feel free to check it out at SpiritualWealth.com. It’s free.)

Frankly, being a writer instead of an investment advisor suits me better. I can give advice freely and no one who heeds it has to wonder whether my real motive is to earn fees or commissions or “capture their assets.” I can write what I want about the market without a compliance officer scrutinizing my words. And my readers don’t have to worry about the objectivity of my analysis. I have no business relationships with the companies I cover, no investment banking colleagues seeking customers for new bond issues or secondary offerings, no reason to tell anything but the plain truth as I see it.

I don’t mind telling you that many of these truths I learned the hard way. You can save yourself a lot of trouble—not to mention a boatload of money—by learning from my experience. As I’ve told my regular readers, “I’ve made the dumb mistakes so you don’t have to.”

In the pages that follow, I’m going to share with you the best long-term investment strategy I know. I call it the Gone Fishin’ Portfolio.

This portfolio will allow you to successfully manage your money yourself using a simple yet highly sophisticated strategy to increase your returns, reduce your investment risk, eliminate Wall Street’s high fees, and keep the taxman at bay, too. The idea is simple: to “Get Wise, Get Wealthy—and Get On with Your Life.”

In Part I, Get Wise, we’ll examine the challenges you face as an investor. I’ll review the fundamental relationship between risk and reward in the financial markets. You’ll also get an insider’s view of how the investment industry really works.

Get Wealthy, discussed in Part II, means understanding and, I hope, adopting the Gone Fishin’ strategy. You’ll learn why this is arguably the safest and simplest way to reach your long-term financial goals. I will also address the financial and psychological challenges you’re likely to face in the years ahead.

Get On with Your Life, which we will discuss in Part III, means taking your financial destiny into your hands and, at the same time, reclaiming your most precious resource—your time.

Setting up the Gone Fishin’ Portfolio is a snap. Maintaining it takes less than 20 minutes a year.

You may not believe you’re qualified to manage your money yourself. If so, I beg to differ. Investing can be made endlessly complicated, or breathtakingly simple. If you’re willing to keep things simple, you’re perfectly qualified to manage your money yourself—and in a highly sophisticated way.

As an investor, your overriding goal is to achieve and maintain financial independence. Your savings are the fuel. The Gone Fishin’ Portfolio is the vehicle to get you there.

Let’s get started.

ACKNOWLEDGMENTS

Many of the lessons in this book came with a knock to the head. Still, I did learn. So I’m grateful for those who gave me that opportunity.

Diego Veitia hired me to become a registered representative back before I knew a stock from a bond. (Pity my early clients.) Without this initial opportunity, I may never have had a career in the financial markets. Thank you, Diego, for taking a chance on me.

I’d also like to thank Mark Skousen, a first-rate economist, author, lecturer, libertarian, and friend. He has taught me a lot about free minds and free markets.

It has also been my exceptional good fortune to work with Bill Bonner, Mark Ford, Julia Guth, and my other colleagues, mentors, and good friends at Agora Publishing. Agora is not only the world’s largest publisher of investment letters, it is also one of the world’s most entrepreneurial companies. What an amazing group of bright, creative, hard-working, (and loony), people.

Writing a book is a bigger project than I would have imagined when I undertook this one. I’d like to thank Mike Ward for nudging me (nagging, really) to take this road. I’d also like to thank Matt Weinschenk and Bob Williams for their many hours of help, research, and support in the shaping and editing of this book.

Thanks, too, to my publishers and editors at John Wiley & Sons, including Debra Englander and Kelly O’Connor, who reviewed the manuscript and recommended many important changes and clarifications.

I want to express my love and appreciation to my wife Karen, daughter Hannah, and son David, who often asked, “Where’s Dad?” during the writing process. Without their patience and support, this book would never have been written.

Lastly, I would like to thank all my regular readers at The Oxford Club, Investment U, and Spiritual Wealth, as well as anyone taking the time to read this book.

Carpe Diem.

ALEX GREEN

PART I

Get Wise

Introduction

As an investment analyst, I speak frequently at investment conferences across the United States and around the world.

The attendees come for a number of different reasons. Some want to gain some insights on interest rates, the dollar, or the stock market. Others are seeking a new investment strategy. Still others are looking for good investment ideas or, as one gentleman insisted, “just one great stock.”

But before you can put your money to work effectively, you need something even more fundamental to your success: a philosophy of investing.

In her book Philosophy:Who Needs It, Ayn Rand argues that all of us have a philosophy of life, whether we know it or not. “Your only choice,” she writes, “is whether you define your philosophy by a conscious, rational, disciplined process of thought . . . or let your subconscious accumulate a junk heap of unwarranted conclusions . . . ”

What’s true of life is also true of investing.

Over the past two decades, I’ve dealt with thousands of individual investors, some highly astute, some rank novices. Many had only the foggiest notion of what they were trying to achieve—or how. In some ways this is understandable. World financial markets are complex and the investment process can be daunting.

Beginners often don’t understand the fundamentals of saving and investing. And even more experienced investors are often stymied by the complexities and technical jargon surrounding the investment process. Many try (and inevitably fail) to outguess the markets—or simply wave the white flag and turn their portfolio over to “that nice young man down at Merrill Lynch.”

Big mistake.

No one cares more about your money than you do. With a basic understanding of the investment process and a bit of discipline, you’re perfectly capable of managing your own money, even your “serious money.” Especially your serious money. By managing your own money, you’ll be able to earn higher returns and save many thousands of dollars in investment costs over your lifetime.

The Gone Fishin’ Portfolio rests on a powerful philosophy of investing. It’s battle-tested. It’s built on the most advanced—and realistic—theories of money management. And it works.

Moreover, this book does something that virtually no other investment guide does. I’m going to show you—very specifically—where you should put your money. And then I’m going to show you how to manage it year after year.

Once you’ve set up your portfolio, the whole process will take less than 20 minutes a year to implement. This may sound like an audacious claim. But, as you’ll soon see, the strategy itself is steeped in humility.

It is based on the only realistic premise for an investment philosophy—that, to a great extent, the future is unknowable. So don’t expect me to draw on my gift of prophecy and tell you what’s going to happen to the economy, interest rates, the dollar, or world stock markets. (No one is more surprised than me how the market action unfolds each year.) Nor will we ignore uncertainty or pretend we have a system that has eliminated it. Instead, we’re going to use uncertainty and make it our friend. In short, we’re going to capitalize on it.

Investing is serious business. Getting it right is the difference between a retirement spent in comfort (or luxury) and spending your golden years counting nickels, worrying whether you’ll have enough. The difference could hardly be starker.

Up until now, you may have been tempted to turn your investment portfolio over to someone else to manage. After all, your financial security is paramount. You may not think you can take the risk—or handle the responsibility—of running your money yourself. I fully intend to disabuse you of that notion. I also want to point out that there are serious risks to turning your money over to someone else. That person may manage it poorly. Or be terribly expensive. Or both.

If you’re skeptical on this point, it may be that you’ve bought the story that Wall Street is selling: Investing is so complicated—or your personal circumstances so exceptional—that you should not be trusted to run your own money.

I’ll concede that if you don’t know what the heck you’re doing, this is absolutely true. But one solution is learning what to do, rather than turning your financial welfare over to someone else.

When it comes to managing your money, there are plenty of potential pitfalls out there. However, those investors who wind up in retirement with less money than they need have generally fallen prey to one of four basic mistakes:

1. They were too conservative, so their portfolio didn’t grow enough to begin generating the income required to meet their spending requirements.

2. They were too aggressive, so a significant percentage of their portfolio went up in flames along the way.

3. They tried—and failed—to time the market. Confident that they would be in for market rallies and out for market corrections, they ended up doing just the opposite much of the time.

4. They delegated unwisely. They turned their financial affairs over to a broker, insurance agent, or financial planner who—over time—converted a substantial amount of their assets into his assets. In addition, the advisor may have been too conservative, too aggressive, or tried and failed to time the market.

If your nest egg is lying in pieces late in life, you generally don’t have the opportunity—or the time—to build another one. The consequences, both personal and financial, can be devastating.

Planning your financial future is a momentous responsibility. Although The Gone Fishin’ Portfolio has a light-hearted name, it enables you to handle your serious money—the money you need to live on in retirement—in a serious way.

There are few guarantees in the world of investing. In fact, once you get beyond the risk-free world of Treasuries and certificates of deposit, there are virtually none. However, the Gone Fishin’ Portfolio eliminates six major investment risks:

1. It keeps you from being so conservative that your long-term purchasing power fails to keep up with inflation.

2. It prevents you from handling your money recklessly.

3. It does not require you to own any individual stocks or bonds. So a single security—think Worldcom or Enron—cannot cause your portfolio to crater.

4. It does not require a broker, financial consultant, or anyone else to attach himself to your portfolio like a barnacle, siphoning off fees every year.

5. It doesn’t require you—or any investment “expert”—to forecast the economy, predict the market, or analyze competing economic theories about the future.

6. Perhaps most importantly, it guarantees that your time will be your own. Rather than spending countless hours evaluating stocks, market trends, or fund managers, you’ll spend your time as you please. While others struggle to manage their money effectively, you’ll have “gone fishin’.”

This last point means that instead of spending countless hours fretting over your investment portfolio, you’ll be able to relax, . . . play golf . . . travel the world . . . spend more time with your kids or grandkids . . . or just swing on a hammock in the shade with a glass of ice-cold lemonade. Because your investments will be on autopilot.

This is not just a strategy for today’s markets, incidentally. The Gone Fishin’ Portfolio is designed to prosper—and generate peace of mind—through all market environments. And I invite you to be skeptical. In fact, let me begin by asking you a question:

If I could show you a way to manage your money yourself, using a strategy that is as powerful and effective as any used by the nation’s top institutions, that will allow you to outperform the vast majority of investment professionals, pay nothing in sales charges, brokerage fees, or commissions, that will take 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?

I hope so. That, in a nutshell, is the Gone Fishin’ Portfolio. It’s about handling the money you intend to retire on simply, effectively, and cost-efficiently, with the absolute minimum of time and attention.

If you’re like most people I know, you have better things to do than watch your stocks bounce up and down all day.

Don’t get me wrong. I’m not averse to trading stocks, myself. (Long-term investing and short-term trading are not mutually exclusive.) But short-term trading strategies are beyond the scope of this book. Instead of focusing on trading or speculating, we’re going to focus here on the money you intend to retire on—and perhaps ultimately leave to your kids, your grandkids, or your favorite charity. This is money that shouldn’t be treated like chips in a poker game.

Reaching financial independence is a serious goal, one that should be pursued in a disciplined, rigorous way.

That’s why I recommend that you make the Gone Fishin’ Portfolio the core of your long-term investment program. The philosophy behind it is based on the best investment thinking available. It has been tested in various economic conditions. It increases your returns while reducing your risk. And it minimizes your investment costs and annual capital gains taxes.

Best of all, it works. Investors who have put their money to work this way have enjoyed years of market-beating returns while taking less risk than being fully invested in stocks.

Now it’s your turn.

CHAPTER 1

The Unvarnished Truth About Your Money

“I offer nothing more than simple facts, plain arguments, and common sense.”

—Thomas Paine

Several years ago, some friends and I were vacationing in Key West and decided to do some deep-sea fishing.

We didn’t have a boat, so we went to a local marina to see what we could charter. There were several boats available, so we began talking to various captains.

Most assured us that the fishing was excellent and encouraged us to hire them for the next day, before someone else booked them first. But since we were in no hurry, we took our time and kept wandering down the dock chatting with the crew of different charters.

Near the end of the dock, we saw an older captain leaning back comfortably in his captain’s chair with a beer in one hand and a cigar in the other.

“How’s the fishin’ been lately?” I asked.

“The fishin’s been great,” he said. “But the catchin’,” he added with a shake of his head, “the catchin’ ain’t been so good.”

“Why not?” we asked, a little surprised given the positive spin we had gotten from the other boat captains.

He said the weather had been unseasonably cool. That had affected migration patterns. The big schools of fish hadn’t shown up yet. “Nobody’s been catchin’ much lately,” he said.

We looked at each other in disappointment.

“It’s still great weather to go out,” he added. “And the fish might show up,” he said after a long puff on his cigar. “You never know.”

The prospect of spending the afternoon on the water without catching anything more than a bout of sea sickness wasn’t terribly appealing. So we huddled to talk about what we wanted to do. After a little discussion, we decided we were willing to risk going out. We also agreed we wanted to use the old boat captain.

Unlike the others, he hadn’t blown any smoke up our skirts. He wasn’t interested in talking us into a fishing trip. He didn’t seem to particularly care whether we hired him or not. As a result, he did something nobody else did. He told us the truth. So we hired him.

We knew from the outset that we were running the risk of hiring a boat and sitting on the water all day without so much as a nibble. We could live with that. And, if we didn’t catch anything, well, at least we went out with our eyes wide open.

The next day the weather was perfect. Despite his laid back attitude, the captain and his mate were good company and gave first-rate service. And the “catchin’?” It was the best fishing I’d ever experienced—then or since.

A few hours after he got us out to his “spot,” the ocean suddenly filled with so many dolphin—mahi—that the water turned yellow.

After a couple hours, our arms were tired. We literally couldn’t hoist any more in. When we returned to port, we were giving away fish to the crew, other anglers who had come back empty-handed, even strangers on the dock. Our coolers weren’t big enough to hold them all. (And, in case you don’t know, fresh Florida mahi is just about the best-tasting fish around.)

What does this story have to do with your investment portfolio? Not much, really. Except I’d like to do for you what that boat captain did for us that day. I want to tell you the unvarnished truth.

I’d like to help you meet your long-term investment goals. But I don’t want to sell you a financial plan, charge you a commission or wrap fee, or manage your money. I don’t want you to subscribe to a financial magazine or investment letter. I just want to give you the straight dope with no strings attached. Believe it or not, that’s a rare thing in the world of investing.

LAY CLAIM TO WHAT’S YOURS

Think about it. When was the last time you received investment advice from someone who was both qualified to give it and had nothing to sell? Not a mutual fund, a trading service, a financial plan, a software program, a brokerage account, an insurance policy, a newsletter subscription, or a managed account. Nothing.

You might think you at least get independent investment advice from the national media, but think again. Cable television parades endless pundits across the screen, all with ever-changing opinions about the economy and the markets, all to sell advertising—most of it investment-related. The financial press maintains a circus of activity as well. Headlines shout, “Retire Rich,” “Five Health Care Stocks to Buy Today,” “Is This Bull Market Over?” “Double Your Investment Income,” “The Shortcut to Seven Figures,” and so on.

The Gone Fishin’ Portfolio is an antidote to all this noise and confusion. It is the distillation of much of what I’ve learned over more than two decades as a research analyst, investment advisor, portfolio manager, and financial writer. It is the key to financial freedom—if you have the discipline to see it through. To benefit from this investment system, you need only follow three simple steps:

1. Read this book carefully to get a thorough understanding of how this strategy works—and why.

2. Put your money to work, as I suggest in Chapter 8.

3. Take less than 20 minutes a year to keep this system on track, as I describe in the same chapter.

That’s it. If you follow these three simple steps, you’ll be on your way to meeting your long-term financial goals—and spending about as much time on your portfolio each year as you would eating lunch at “Five Guys Famous Burgers and Fries.”

Be forewarned that my objective here is not theoretical. I don’t want you to simply read the book, nod your head, and say, “Good idea.” My goal is to encourage you to use it, to benefit from it. I want to set you on a path to a place where money and its management are no longer a problem in your life.

In essence, the Gone Fishin’ Portfolio is about setting you free from concerns about your financial future. True, the future is always uncertain. But you’ll enjoy the satisfaction and peace of mind that come from using an investment system that offers a very high probability of success. That’s not just my opinion, by the way. It’s also the opinion of the Nobel Prize Committee. (More on that in Chapter 7.) Hundreds of billions of dollars of institutional money are being run using systems very similar to the one I’m about to describe.

Incidentally, I’ve also set up a special Web site devoted to this investment system. It will allow you to track your progress and even reminds you of the simple steps you need to take once a year to keep your portfolio on track. (Feel free to visit it at www. GoneFishinPortfolio.com.)

When you’re done reading this book, there is only one commitment you’ll need to make: personal responsibility for your own financial freedom. I can’t overemphasize how important this is.

LEAVE NOTHING TO CHANCE

Your employer and the federal government are not going to get the job done for you. Yet for more than two-thirds of elderly Americans, Social Security is their major source of income. (For a third of them, Social Security is their only income.) If you are retired or close to it, you can count on Social Security to help meet your financial needs. But it’s tough to imagine living on it.

For young workers, the program is a demographic time bomb. Americans are living healthier and longer lives than ever before. When the Social Security program was created in 1935, a 65-year-old American had an average life expectancy of 12.5 years. Today, it is 18 years . . . and rising rapidly.

In addition, according to the U.S. Bureau of the Census, 78 million baby boomers began retiring in 2008. In 30 years, there will be twice as many Americans eligible for Social Security as there are today. Meanwhile, the number of workers per beneficiary has dropped from 5.1 in 1960, to 3.3 in 2007, to a projected 2.1 in 2032.

Forget about this so-called trust fund. Current payroll taxes are being used to pay out current benefits, making Social Security look increasingly like a Ponzi scheme. Early investors get paid by new ones. Latecomers get left holding the bag.

I’m not an alarmist, but facts are facts. There are not going to be enough workers to maintain the current level of benefits indefinitely. The federal government’s own Web site says, “The current Social Security system is unsustainable in the long run.”