Today’s Flash Back Friday comes from Episode 120, originally published in January 2013.
Jason Hartman interviews Alexander Green, author of the book, The Gone Fishin’ Portfolio, among others, regarding Alexander’s philosophy, which is that you can successfully manage your own money and investments and only rebalance it once a year. He stresses that the importance is following the right principles, not the right predictions. There are six things that will determine the future value of your investment portfolio:
- The amount of money that you save
- The length of time that you let it compound
- Asset allocation
- Individual securities
- Expenses you pay
- Taxes you absorb
Alexander encourages handling finances and investments in a sensible, straightforward, principled way. He talks about the psychology behind speculating often manifesting as overconfidence or, in some cases, an addiction.