Investment Risk: How to Avoid the 4 Most Dangerous Pitfalls of Investing
by Dr. Mark Skousen, Advisory Panelist, Investment U
Thursday, September 11, 2008: Issue #853
Investment U Chairman Alexander Green’s new book “The Gone Fishin’ Portfolio: Get Wise, Get Wealthy… and Get On with Your Life” was only officially released Tuesday. I was hoping to be the first to review it. But, apparently, successful traders and investors move fast. The book is already #1 on Barnes & Noble.com and #2 on Amazon.com. (His book is outselling other new books released this week by Thomas Friedman and Bob Woodward!)
What’s going on here?
Most financial writers and brokers are high on promises, but seldom deliver. Every investment advisor promises to beat the market. But few actually do over time. They have a hot hand one year, and a cold hand the next. What should an investor do?
In my 40 years in the financial world, I’ve found the key to success is primarily to watch out for the most dangerous pitfalls of investing. If you avoid these types of investment risk, you are likely to be successful.
The 4 Most Dangerous Investment Risks
What are the four dangerous investment risks? In his new book, Alex identifies the following.
- Being too conservative, so that your hard-earned savings don’t keep up with inflation.
- Being too aggressive, so that you end up losing your shirt or blowing up part of your portfolio.
- Trying to time the market. Study after study has shown that no one can consistently time the market.
- Unwisely turning your money over to a money manager who loses your wealth, slowly or quickly.
Investing can be one of the most frustrating experiences in life. It reminds me of an old saying on Wall Street:
“Sell them and you’ll be sorry, Buy them and you’ll regret, Hold them and you’ll worry, Do nothing and you’ll fret.”
What to do?
Create the perfect portfolio and then… go fishing!
A Unique Portfolio With Low Investment Risk
Alex has created a unique portfolio that has consistently beaten the market in good times and bad - and requires no trading whatsoever! (It has some similarities with the system that Harry Browne created in the 1980s, only with less investment risk.)
He recommends 10 specific, ultra-low cost, tax-efficient funds that are available through any discount brokerage or 401(k) plan. So it’s easy to set up.
The portfolio includes a somewhat unconventional combination of stocks (foreign and domestic, including emerging markets), inflation-indexed bonds, real estate and commodities, etc. I call it “non-correlated” investing, and it’s very similar to the technique used by David Swenson at Yale University to run the highly successful Yale endowment.
If there is one omission in Alex’s portfolio, it would be gold and silver coins. However, he does recommend exposure to mining shares and commodity stocks, which I think is vital. (However, you might also take physical possession of gold and silver as part of your permanent portfolio to protect you in the event of some financial Armageddon.)
Why is Alex’s book flying up the bestseller lists?
I think one reason is that he has a large and devoted following after many years as a successful analyst. However, in gathering information for this review, I’ve run across glowing reports on the book from across the whole investment spectrum, from Super Bulls to Super Bears.
Comments on The Gone Fishin’ Portfolio
Here is just a sampling of comments I’ve uncovered about The Gone Fishin’ Portfolio:
“The Gone Fishin’ Portfolio is a superb strategy for delivering top-tier investment results. It’s smart. It’s conservative. It takes very little time. And the returns have been superb.”
- Michael Masterson, Bestselling Author, “Automatic Wealth”
“A simple but sophisticated strategy that actually works, written in plain language, by a brilliant investor.”
- Steve Sjuggerud, Editor, True Wealth
“I couldn’t put the book down.”
- Chris Weber, Editor, The Weber Global Opportunities Report
“In my experience, the more complex a strategy is, the more likely it is to blow up. The Gone Fishin’ Portfolio is the perfect antidote. It’s simple and easy to understand. And it works!”
- Bill Bonner, Bestselling Author, “Financial Reckoning Day”
“Loved the book! This is what I’m going to do with my own money.”
-Porter Stansberry, Editor, Porter Stansberry’s Investment Advisory
The book is available in bookstores everywhere but Amazon discounts all its top 10 sellers 45%. So it is available on Amazon today for just $15. To purchase a copy, click here.
I suggest you obtain a copy of Alex Green’s new book and set up your own portfolio this way.
Please don’t be fooled by the simplicity of this approach. It eliminates most of the major risks of investing. And it works. The Gone Fishin’ Portfolio has compounded at 17.3% annually since inception.
Not bad.
As Warren Buffett famously said, “You don’t have to do extraordinary things to get extraordinary results.”
Good trading,
Mark
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Related Articles:
- The Gone Fishin’ Portfolio: Get Wise, Get Wealthy… & Get On With Your Life
- The Gone Fishin’ Portfolio: Investment Success In Just 15 Minutes a Year
- The Gone Fishin’ Portfolio - An Excerpt
