Bill O'Reilly
Long Island
October 2020
PREFACE
In early 2003, I created a new investment portfolio for subscribers to The Oxford Communiqué and gave it a lighthearted name: the Gone Fishin’ Portfolio. After a few years of market-beating returns, multinational publishing house John Wiley & Sons asked if I would write a book about it. I agreed.
I knew I had an excellent strategy to share with the world. However, I also realized that most financial advice has a short shelf life. Things change quickly in the world and in markets. Even the best investment letters written by the most insightful analysts are soon lining the reader's birdcage. A book, by contrast, gives an author the opportunity to make a considered argument, flesh out his or her case, and answer potential objections or criticisms.
But then, who needed another investment book, then or now? The shelves in my home were already groaning with titles on stock selection, value investing, trading strategies, asset allocation, global diversification and many other topics. I learned a lot from those books, but it wasn't always what the authors intended.
I discovered that no matter how smart, how experienced or how insightful the advice-giver, investment predictions—with the luxury of hindsight—can appear not just wide of the mark but foolish. Indeed, many investment books from years past stand out primarily as cautionary tales about pride and hubris.
The authors who made a compelling case for their investment approach were often short on specifics. For example, if high returns could be made investing in value stocks, great—but which ones? Sure, the author could offer a screen using price-to-sales, price-to-earnings, price-to-book, dividend yield or other financial metrics. But how many readers were actually equipped to do this—and to follow through with an equally rigorous sell discipline? Not many. The author could make specific stock recommendations, of course, but, in most cases, that is better done in an e-letter since the economy and financial markets change quickly.
The advice given in most investment books is either too ambiguous or, conversely, specific but soon dated. No wonder so few investment books are considered classics.
My goal was to break this trend and offer timeless investment advice that told readers exactly how and where to invest their money and in what percentages. And that's exactly what I did with the first edition of The Gone Fishin’ Portfolio.
I soon learned there was an eager market for this kind of book. The week of its publication it soared to No. 2 on Amazon's list of nonfiction bestsellers and hit The New York Times’ bestseller list the following week.
Timeless investment advice is an ambitious goal, however. And much has changed since the book's publication in 2008.
We witnessed the housing bust and the biggest financial crisis in nearly a century. Oil prices plunged as new technologies—horizontal drilling and hydraulic fracturing—made formerly inaccessible deposits economically viable. Interest rates dropped all the way to zero—and into negative territory in many countries.
We enjoyed the longest U.S. economic expansion and bull market from 2009 to 2019.
Eleven years of extraordinarily high stock returns were followed by a global pandemic, the greatest spike in unemployment since the Great Depression, the largest economic contraction ever, and the fastest—and shortest—bear market in history, quickly followed by the fastest market rebound and largest quarterly economic expansion in history.
With all these booms and busts, the Gone Fishin’ Portfolio was truly put to the test. And it came through like a champ, delivering solid returns with less risk than being fully invested in stocks, and without a single modification to the original strategy.
This last point is key. The idea behind this investment system is to quit worrying about the economy, inflation, interest rates or the financial markets and instead use a strategy designed to grow your assets in good times and protect them in bad, despite the fact that we cannot know in advance when these expansions and contractions will arrive.
My goal with this book is to show readers the safest, simplest way to achieve and maintain financial independence.
I'm not talking about people with great connections, incredible talents or innate genius. I'm talking about everyday, ordinary people. People like Ronald Read.
Read, a longtime resident of Brattleboro, Vermont, died in 2014 at age 92. He lived modestly, as you might expect for a man who worked 25 years at a gas station and then 17 more as a janitor at a local J.C. Penney. Yet his relatives were shocked when they discovered that he left behind an estate valued at almost $8 million.
Read's story puts the lie to the conventional wisdom that to get rich you have to be well connected, highly educated or a successful entrepreneur with his or her own business. He made his fortune in the stock market, where anyone with even a modest amount of savings can take an ownership stake in many of the world's best businesses. He had no formal training in business or economics. But, as he proved with his own example, that's not necessary for long-term investment success.
How did a janitor and gas station attendant build a net worth that put him in the top 1% of the nation? Read was patient. He thought long term and wasn't buffeted by daily events or the regular caterwauls of market pundits. He didn't mistime the market because he never tried to time it. And he diversified broadly.
(Some investment pros will tell you the key to making a fortune in the stock market is owning a concentrated stock portfolio with just a small number of names. The assumption, of course, is this limited selection will do exceptionally well. But what if it doesn't? What if it does exceptionally poorly instead? A smart investor spreads his bets not only to reduce risk but to increase his chances of holding a lot of big winners. In the pages ahead, I'm going to show you how to own not just a few of the market's biggest gainers in the years to come but every one of them—and not just possibly but definitely. So stay tuned.)
Read kept his investment costs minimal. He didn't use a full-service broker or other high-paid advisor. He used a discounter only to execute his trades. And he lived frugally. Although his stock portfolio hit the multimillion-dollar mark many years before he died, he didn't flaunt his wealth. He was generally seen in the same flannel jacket and baseball cap. His most expensive possession was a 2007 Toyota Yaris valued at $5,000. He foraged for his own firewood and would often park several blocks away to avoid paying parking fees. As a result, he went from being a janitor to a philanthropist.
What did Read do wrong? From an investment standpoint, almost nothing. But from a commonsense standpoint, I question whether it was wise to live a life of such extreme frugality.
(As we'll discuss, that isn't necessary with the Gone Fishin’ strategy. Living like a miser so you can spend your money in retirement is a bit like saving up all your sex for old age. It doesn't make a lot of sense.)
Read could have enjoyed some of the fruits of his success while he was alive, treating himself or someone he loved to something special every once in a while. Then again, that must not have been important to him. (And, after all, it was his money.) Clearly, he enjoyed the challenge of living modestly, something beyond the imagination of most Americans today.
On the other hand, his local library and hospital in Brattleboro are grateful. Read bequeathed them more than $6 million.
Why would I lead off with a story about a janitor and gas station attendant who accumulated a multimillion-dollar fortune? After all, someone like Read must clearly be the exception, not the rule.
Not so. I've met many men and women from humble circumstances who have developed sizable fortunes … and heard about many more. One of my regular golf partners recently told me he had just settled his father's estate.
“The man was a barber. He never made more than $10,000 a year. So I was surprised to find