How to Get the Most from The Oxford Club s Time-Tested Wealth-Building Strategy

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Roderick Pierce
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1 The Oxford Club Premiere Investor Report Q From: The Oxford Club Research Team For: Oxford Club Members How to Get the Most from The Oxford Club s Time-Tested Wealth-Building Strategy Asset allocation. Those two words represent the Holy Grail of investing. It s the secret behind how so many of our long-time members got rich and stay rich. This is where you begin your overall investment plan. On the surface, this strategy sounds so boring that you can t imagine it s the difference between living your life the way you decide, and spending your golden years working and scrambling just to get by. Fact is it s the proven difference between lasting wealth and everything else. It s an easy-to-understand plan that may account for as much as 89% of a portfolio s performance. Quite simply, asset allocation is the process of determining the most effective mix of investment opportunities. Regular readers of The Oxford Club Communiqué already know that these investment opportunities are likely to include stocks, bonds, cash and real estate arranged in a diversified mix that suits your investment style, how fast you need to cash in returns, and your risk tolerance. How important is asset allocation? Extremely. A few years ago, Ibbotson Associates, a highly regarded financial research firm, did a study to identify the primary reasons for the IMMEDIATE ATTENTION REQUIRED For the most recent and up-to-date information please visit

2 The Oxford Club Premiere Investor Report success or failure of different investment portfolios. The answers Ibbotson came up with certainly weren t what Wall Street wanted to see. The Ibbotson research found that only 5% of investment returns could be explained by investment selection. Far more important, it found asset allocation accounted for nearly 90% of investment returns! So let s take the first steps to break down your total investment funds into asset classes. An asset class is a group of securities that have similar financial characteristics. There are a lot of asset classes available today. But the five principal types of long-term investments are stocks, bonds, real estate, precious metals and cash (meaning highly liquid and secure short-term instruments such as T-bills, money market funds and CDs). When astutely mixed together, they can smooth out the volatility (or variability) of your returns even while increasing returns! And that s the whole point of proper asset allocation. Investors who are looking forward at least five to 10 years should consider the following Oxford Club allocation as a basic outline of a portfolio mix that can help you target high returns with relatively low risk: U.S. Stocks 30% Foreign Stocks 30% High-Grade Bonds 10% High-Yield Bonds 10% Inflation-Adjusted Treasuries 10% Real Estate Investment Trusts 5% Precious Metals 5% Oxford Asset Allocation Model 10% High- Yield Bonds 10% Inflation Adjusted Treasuries 10% High-Grade Bonds 5% REITs* 5% Precious Metals 30% Foreign Stocks 30% U.S. Stocks *Real Estate Investment Trusts 2

3 Premiere Investor Report The Oxford Club There are a few things to consider: First, this model will not fit everyone. If you are closer to retirement, you d want to increase the bond holding and decrease the stocks. For some timid investors the stock exposure may be too high and they should shift to more bonds as well. (Keep in mind, it s important not to be too conservative, because you have to outpace inflation in order to have any sort of retirement. But you also need to sleep at night.) There are endless permutations, but this allocation is the perfect starting point for most investors. Second, there will be those who challenge this asset allocation. For instance, after the real estate meltdown of 2008, some would object to holding any real estate investment trusts. That s not the point of an asset allocation model. This model does not depend on market timing or any predictions about what asset classes will perform best this year or next. It s about using historically proven uncorrelated assets to provide the highest and safest return possible. A young investor should use this model for 30 years without adjustment. There will be times when certain asset classes underperform. And immediately after that, these same assets will outperform to catch up to the others. That s exactly why asset allocation works. It s not a prediction, it s a timeless principle. The Theory in Practice If you were to look at your investable assets from a bird s-eye view, you want them to represent your asset allocation model. (By investable assets, we re excluding the value of your home and the cash for your daily life.) The Oxford Club has a variety of portfolios with different goals and strategies. Let s take a quick look at each. 3

4 The Oxford Club Premiere Investor Report The Trading Portfolio The Oxford Trading Portfolio contains most of our individual stock recommendations. It is geared toward investors with a shorter-term investment horizon. In it we try to provide a little bit of everything from higher risk/higher returns to low risk, more conservative plays. But each recommendation is included because we believe it provides the best A 35% Trailing Stop? From time to time we ll want to give certain stocks a little extra leeway. On these occasions we ll give this a 35% trailing stop and they ll be clearly marked in the portfolio. opportunity for making money right now. Here you ll find growth stocks, value stocks, income stocks everything. Invest only where you are most comfortable. The portfolio also features a 25% trailing stop strategy, the heart and soul of our investment philosophy. Using a trailing stop guarantees that we let our winners ride, while cutting any losses short. The Oxford Trading Portfolio is considered our main portfolio. Our monthly Communiqué adds a new stock to this portfolio each month and it is tracked until exit. But for those with different goals, we have others The Gone Fishin Portfolio This portfolio, the subject of the New York Times Bestseller titled: The Gone Fishin Portfolio: Get Wealthy, Get Wise and Get On with Your Life, is a long-term retirement portfolio that has beaten the market every year since its inception. The portfolio is based on a unique philosophy. First, we can t time the market and neither can anyone else. Second, it relies on asset allocation to reduce risk and amplify returns. And third, it uses the lowest-cost index funds available to boost returns over time. The result is a specific mix of 10 funds from Vanguard that should be held for many years. The mix is designed for the average investor more than five to 10 years from retirement, a period referred 4

5 Premiere Investor Report The Oxford Club to as the wealth accumulation stage. This fits almost 90% of investors. In this portfolio, we employ no trailing stops. This isn t trading; it s long-term investing in various market indexes. The portfolio doesn t change ever. It s a set-it-and-forget-it approach that should take about 15 minutes per year to maintain, hence all the time you could be Gone Fishin. The All-Star Portfolio Here s a silly question: Who is better equipped to earn a high return on your stock portfolio over the next five years, you or Warren Buffett? With all due respect, I hope you chose Buffett. Visit then go to Members Only. In the Urgent Investors Report section there is a 23-page report that details the Gone Fishin Portfolio. For even more information, check out The Gone Fishin Portfolio by Alexander Green from Wiley Publishing. It s available on amazon.com. Yet how many shares of Berkshire Hathaway do you own? If you re like most members, probably none. For that matter, do you know if your investments in REITs or emerging markets are the best ones available? What about your general equity mutual funds or your bond investments? The All-Star Portfolio is based on a simple premise: Give your money to the best money managers in the business and have them manage it for you. This portfolio contains five such managers, including masters like Warren Buffett, Bill Gross the man who invented bond trading and Mark Mobius the Indiana Jones of emerging market investments. Because of the long-term track record of these legendary investors, we employ no trailing stops. We expect these to be long-term holdings for multiple years. The Perpetual Income Portfolio The Perpetual Income Portfolio focuses on investments that 5

6 The Oxford Club Premiere Investor Report will provide above-average and, most importantly, reliable income. The portfolio is broadly diversified among the perfect mix of stocks, ETF s and REITS, so we also lower risk crucial for Oxfordians in or nearing retirement. But just because we re focusing on income-producing assets, that doesn t mean we re settling for plain vanilla investments. Dollar Cost Averaging: By investing the same dollar amount at regular intervals, you buy more shares when prices are low. This reduces your overall cost and boosts returns. To the contrary, we insist on undervalued assets with rock-solid fundamentals in the most compelling areas of the market, offering better-than-average yields. And we re willing to look the world over to find them. While you may never hit a home run in this portfolio, the combination of steady, high-paying dividends and modest capital appreciation promises to provide strong, consistent returns. The Perpetual Income Portfolio is designed as a very long-term holding. Although we use trailing stops in this portfolio, we don t expect a lot of volatility or trading activity. Combining the Best Investments for Maximum Profits The First Decision to Make The first thing to consider is position sizing, or how much to invest in a particular stock. Without knowing anything about your particular finances, the general answer is 4% of your equity portfolio. If you want to be conservative, invest less. If you want to be aggressive, invest more. But not too much more. It seems like the way to get rich quick is to load up your cash into a sure thing, but it s more likely the quick way to go broke. Holding 6

7 Premiere Investor Report The Oxford Club large blocks of a single stock is simply not prudent. Remember, this applies to individual stocks, not mutual funds. The View from the Top There are a million ways to combine The Oxford Club portfolios and still follow the asset allocation model. When managing these portfolios within the context of asset allocation, you just have to pull back and take the bird s-eye view to repeatedly assess where you are. The easiest way to follow the asset allocation model would be to invest in the 10 mutual funds of The Gone Fishin Portfolio in the suggested percentages. Consider that your baseline. Start with The Gone Fishin Portfolio and then take funds to invest in the individual investments from there. If you d like to be active in The Oxford Trading Portfolio, then some of the assets from the stock mutual funds could be set aside for more active trading. Now, The Oxford Trading Portfolio itself will contain investments that cover a variety of asset classes. It will be mostly stocks, and it will maintain a balance pretty close to half in U.S. stocks and half in international stocks. The Oxford Trading Portfolio stocks are not selected to fill a particular allocation. In other words, if we remove an international stock, we won t feel the need to replace it with another international stock. The next pick could be a domestic stock or a REIT or anything. The Oxford Club wants to pick the best available investment at any time. Forcing ourselves to follow a replacement strategy would hamstring our efforts and, in turn, reduce your returns. When you see a portfolio you want to participate in, take a moment to view this website that lists all of the current positions and what asset class they represent: 7

8 The Oxford Club Premiere Investor Report Oxford Asset Allocation Model 10% High- Yield Bonds 10% Inflation Adjusted Treasuries 10% High-Grade Bonds 5% REITs* 5% Precious Metals 30% Foreign Stocks 30% U.S. Stocks *Real Estate Investment Trusts Gone Fishin Portfolio 10% High- Yield Corp Fund 10% Inflation Protected Securities Fund 5% REIT* Index Fund 5% Precious Metals and Mining Fund 15% Total Stock Market Fund 15% Small Cap Fund 10% Short Term Bond Fund 10% Pacific Stock Fund 10% European Stock Fund 10% Emerging Markets Fund *Real Estate Investment Trusts So for instance, if you chose to invest in The All-Star Portfolio, the shares of Berkshire Hathaway (NYSE: BRKB) would be a U.S. stock holding. The shares of the Managers PIMCO Bond Fund (MBDFX) would be a high-grade bond holding and the Templeton Dragon Fund (NYSE: TDF) would be a foreign stock holding. Each portfolio will have holdings pop up in different asset classes. So each time you make a change to your portfolio, you want to pull back and look at it from the bird s-eye view and see how your asset allocation looks. What asset class did that new recommendation fall under? 8

9 Premiere Investor Report The Oxford Club If you have any holes in your allocation, you can keep them plugged with a mutual fund from the corresponding asset class. (Important note: Mutual funds are not trading vehicles. Moving in and out of them will incur serious fees. You want to keep these holdings as stable as possible.) The Incorrect Way Many members take a different and incorrect approach. They will say something like, I will put 30% in The Gone Fishin Portfolio, 10% in The Perpetual Income Portfolio and so on. But the reality is this any individual s investment situation is too complex for us to design portfolios that will work in this way. You must keep your overall perspective centered on asset allocation. Take Just a Few Minutes Decide on a specific asset allocation. And then fill it. It s that simple. That s all you need to do to have an intelligent and cohesive investment strategy. It will only take a few minutes to completely change your financial future for the better. OC 9

10 From time to time, Oxford Club will recommend stock investments that will not be included in the VIP Trading Circle or in the Communiqué s Portfolios. There are certain situations where we feel a company may be an extraordinary value but may not necessarily fit within the selection guidelines of these existing portfolios. In these cases, the recommendations are to be considered as speculative and should not be considered as part of the Club s more conservative Communiqué portfolio. Also, by the time you receive this report, there is a chance that we may have exited a recommendation previously included in a VIP or Communiqué portfolio. Occasionally, this happens because we use a disciplined trailing stop philosophy with our investments, meaning that any time a company s share price falls 25% from its high, we sell the stock. NOTE: The Oxford Club is not a broker, dealer or licensed investment advisor. No person listed here should be considered as permitted to engage in rendering personalized investment, legal or other professional advice as an agent of The Oxford Club. The Oxford Club does not receive any compensation for these services. Additionally, any individual services rendered to Oxford Club members by those mentioned are considered completely separate from and outside the scope of services offered by The Oxford Club. Therefore if you choose to contact anyone listed here, such contact, as well as, any resulting relationship, is strictly between you and the Pillar One service. If you have any questions about your Oxford Club subscription, or, would like to change your settings, please contact us at Monday Friday between 9:00 AM and 5:00 PM Eastern Time. Or if calling internationally please call Copyright 2012-present The Oxford Club, LLC All Rights Reserved The Oxford Club 105 West Monument Street Baltimore, MD North America: ; Fax: International: ; Fax: customerservice@oxfordclubinfo.com The Oxford Club is a financial publisher that does not act as a personal investment advisor for any specific individual. Nor do we advocate the purchase or sale of any security or investment for any specific individual. Club Members should be aware that although our track record is highly rated by an independent analysis, and has been legally reviewed, investment markets have inherent risks and there can be no guarantee of future profits. Likewise, our past performance does not assure the same future results. All of the recommendations communicated to members during the life of this service may not be reflected here. The stated returns may also include option trades. We will send all our members regular communications with specific, timely strategies and updated recommendations; however, you should not consider any of the communications by our company and employees to you as personalized investment advice. Note that the proprietary recommendations and analysis we present to members is for the exclusive use of our membership. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication or 72 hours after the mailing of printedonly publication prior to following an initial recommendation. Any investments recommended in this letter should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company. Protected by copyright laws of the United States and international treaties. This Newsletter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the worldwide web), in whole or in part, is strictly prohibited without the express written permission of The Oxford Club, LLC. 105 W. Monument Street, Baltimore MD K web The Oxford Club 105 W. Monument Street Baltimore, MD R012010web0412

The Four Pillars of Wealth

The Four Pillars of Wealth How to achieve your financial goals in the new millennium Dear Fellow Oxfordian: If you re like most Oxfordians, you came by your wealth the oldfashioned way. You earned it.