Vanguard Retirement Advice vs. Kirk's Newsletter: A Testimonial

All of the core funds in my newsletter are low cost index funds from Vanguard.  
Currently I recommend six different funds for both my "Aggressive Core Portfolio" and my "Conservative Core Portfolio."  Here is an email I got out of the blue from a subscriber who has been with me for many years and gave me permission to use his note.

On 6/6/2016 5:14 PM, Tom H. wrote:

Hi Kirk,

   I thought I would share a conversation with a Vanguard advisor on Friday and for the first time ever I felt like I was being sold.  They “offered” a service that has a name which I can’t recall but basically they would advise and monitor and discuss with me on a quarterly basis my investment portfolio.  I’m sure they would be helpful but for a guy who has mostly done all his own homework or more recently relied on your newsletter it felt like a lot of $.  I believe the cost is .30 or $3,000 per million annually.  On a percentage basis it doesn’t sound like a lot but compared to your newsletter and a long time investor who has gained a lot of knowledge I felt sticker shocked.  I guess what I’m saying is your newsletter is a bargain 

    I’d also like to ask why you don’t just throw all your international into the total international stock rather than sector it. ......  Thanks.

Tom

Kirk Lindstrom's Investment Letter:

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Kirk Lindstrom's Two Investment Letters

I write two different, but related, newsletters.

#1 "Kirk Lindstrom's Investment Letter" is $155 a year and uses the "core and explore" method to invest. It has two core portfolios plus an explore portfolio of individual stocks. My aggressive core portfolio has 80% equities while my "conservative" core portfolio has 50% in equities. My core portfolios are made of index funds and ETFs for the very lowest expenses.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 212%  vs. the S&P500 UP only 25% vs. NASDAQ  UP a only 22%   (All through 12/31/10) 

In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% 

vs. the DJIA up 1.8%

In 2010 my "Explore Portfolio" gained 20.5%!! 

vs. the DJIA up 13.8%

The explore portfolio was roughly 70% equities for the year so the stocks in the portfolio had a banner year!  Click for a full performance table here. 

I recommend people start by getting their proper core portfolio created THEN add individual securities (Stocks, ETFs, Specific TIPS and even specific fixed income investments) I cover in my explore portfolio to build your own explore portfolio for 5 to 20% of your investment portfolio total.

"Kirk Lindstrom's Investment Letter Explore Portfolio" gained 20.5% in 2010 with 75% in equities and 25% fixed income with an overall portfolio beta of 1.0. For 2010, the DJIA gained 13.8%  (FREE Sample Issue - More Info - Return Data )

I have target prices to buy and sell my explore stocks so I find I almost look forward to market declines to get really great prices for stocks I can sell later at higher prices. Of course, following this explore portfolio is more work than buying index funds and rebalancing once a year that I recommend for my core portfolios. Compared to "other newsletters" costing more, my core portfolios and general stock market coverage in the first 11 pages of the 35 page monthly letter offer significant value even for those who don't dabble in individual stocks. I do (so far successfully) a small amount of "market timing" with a small portion of my explore portfolio but it mostly follows my "asset allocation strategy" as explained in "Using Asset Allocation to make money in a Flat Market."

#2 I write "The Retirement Advisor" with David Korn. We sell this for a very modest $99. We offer three model portfolios. We do not recommend individual stocks but we have articles that discuss current financial events such as economic data and Social Security COLAs. We also have articles to help you save money plus we find CDs with FDIC paying the highest rates. Our most aggressive portfolio has 50% in equities. Our most conservative portfolio contains no equity exposure.

Difference: The conservative (50:50) core portfolio in "Kirk Lindstrom's Investment Letter" is slightly more aggressive than the aggressive model portfolio #1 in "The Retirement Advisor." Over the very long term, you should expect the most aggressive portfolio to have the highest returns but at a price of higher volatility. When we started the "The Retirement Advisor" in 2007 we thought people like Bob Brinker were far too aggressive with equity exposure recommendations for retired people at such a risky time for the markets. If you recall, Brinker's Model Portfolio #3 was nearly 2/3rds in equities when the markets peaked. As our great returns show, we were right.

Summary:

"Kirk Lindstrom's Investment Letter" is for those who want to use individual stocks in an attempt to enhance their core portfolio returns. Some like to buy or trade individual stocks for extra return as they try to beat the markets over the long term as they build their investment portfolios to retire someday in the future. For those people, I recommend they place 120% less their age of their investment portfolio in my "core aggressive" portfolio and use remainder to follow some or all of my explore portfolio. For example, someone 40 years old would have 80% in my core aggressive portfolio and 20% in my explore portfolio.

For those at critical mass in retirement, there is no need to take a lot of risk so I recommend 95% of investment assets in my "core conservative" portfolio and the remaining 5% in some or all of my explore portfolio for "entertainment."

In sharp contrast, "The Retirement Advisor" has no individual stock advice. The portfolios are designed not to try and beat the markets but to help you sleep better at night in retirement with lower portfolio volatility. "The Retirement Advisor" also helps you manage your "living expense" or "emergency" account that is outside your investment portfolio. In addition to portfolio and living expense management help, "The Retirement Advisor" has articles to help you save money, understand Social Security, follow the basics of the economy and how it relates to our advice.

Many of my readers subscribe to and enjoy both newsletters.

"Kirk Lindstrom's Investment Letter"

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The Retirement Advisor Model Portfolios all began with $200,000 on 1/1/2007

The Retirement Advisor Portfolios	Dollar Value on 12/31/2010	Change
Model Portfolio 1	$237,774	18.9%
Model Portfolio 2	$243,039	21.5%
Model Portfolio 3	$250,072	25.0%
DJIA 12,501.52 on 1/1/2007	$11,578	(7.4%)
S&P500 1,418.30 on 1/1/2007	$1,258	(11.3%)

• Website for more information and The Retirement Advisor annual Performance Data

• Click here to start your subscription to The Retirement Advisor now!

FREE SAMPLE issue of The Retirement Advisor newsletter in pdf (sometimes it is slow to load.)

My Portfolios at All Time Highs as we Enter 2011

In 2010 YTD my "Explore Portfolio" gained 20.4%!!

Happy New Year everyone!

2010 was another great year for stock market investors.  The Dow Jones Industrial Average gained and the S&P500 both had double digit returns.  When you include dividends, the DOW and S&P500 gained 13.8 and 14.9%, respectively.

2010 was an even better year for "Kirk Lindstrom's Investment Letter" where my "explore portfolio" handily beat the S&P500 yet again with only 70% in equities! 

After gaining 33.5% in 2009, my "explore portfolio" in 2010  gained another 20.4% to finish higher than it was at the end of 2007 and just a few points below its all time high.

The two "total portfolios" that I recommend for aggressive and conservative investors finished 2010 at new record highs! How many can honestly make that claim?

My Returns by Year

Click for full size tables

This shows how the "core and explore" portfolios are making new highs.

Since 12/31/98 "Kirk's Newsletter Explore Portfolio" is UP 212%  vs. the S&P500 UP only 25% vs. NASDAQ  UP a only 22%   (All through 12/31/10) 
In 2009, "Kirk's Newsletter Explore Portfolio" gained 33.5% vs. the DJIA up 1.8%

In 2010 YTD my "Explore Portfolio" gained 20.4%!!

vs. the DJIA up 13.8%
(the explore portfolio has 70% in equities and 30% in fixed income so the stocks are doing very, very well)

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Best Investment & Retirement Portfolios for the Long-term

Charles Munger, Warren Buffett, Berkshire Hathaway and Kirk Lindstrom's Explore portfolio

What do Charles T. Munger and Warren E. Buffett`s Berkshire Hathaway (BRKA) have in common with Kirk Lindstrom's Explore Portfolio?

Commonalities:

• All invest for the long-term where first priority is getting good value for the investment dollar in companies we like for above average long-term growth.
• Both Berkshire Hathaway and "Kirk Lindstrom's Explore Portfolio" take profits when investments are successful so we can maintain a cash reserve of roughly 20% to 40% for future opportunities.
• Both have performed far better than buy and hold the S&P500 the past decade. 
• Both believe we can beat the market by buying good stocks for the long term when they are priced correctly.

Differences:

• Berkshire Hathaway has a significant premium in the price for its aging managers. 
• Charley Munger was born January 1, 1924 (in Omaha, Nebraska) and Warren Buffet was bone on August 30, 1930. Both men are older than my now deceased parents.   I was born April 5, 1957.
• Through my understanding of technology from working as a research and development (R&D) engineer AND scientist at Hewlett Packard from 1978 to 1998, I've been able to invest in quality technology stocks so my portfolio has more than doubled the annual return for BRKA since I started my newsletter.

The stupid sees difficulty in every opportunity; the intelligent sees opportunity in every difficulty. --Nahsti 

From Interview with Charlie Munger :

Q: What do you think of the efficient market theory, which holds that at any one time all knowledge by everyone about a stock is reflected in the price?

A: “I think it is roughly right that the market is efficient, which makes it very hard to beat merely by being an intelligent investor. But I don't think it's totally efficient at all. And the difference between being totally efficient and somewhat efficient leaves an enormous opportunity for people like us to get these unusual records. It's efficient enough, so it's hard to have a great investment record. But it's by no means impossible. Nor is it something that only a very few people can do. The top three or four percent of the investment management world will do fine.”
From Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

Returns for last 12 years

Click for Full Size Table

I recommend a "core" portfolio for about 80 to 95% of your funds and an "explore" portfolio made of stocks from my newsletter "explore portfolio" for the remainder. My newsletter stocks are volatile by design to add to overall returns, but you need a good core portfolio to sleep well at night. I offer several different core portfolios for both aggressive & conservative (retired) investors.

Since starting this newsletter in 1998, I have grown my "Explore Portfolio" 388% from $100,000 to $487,644. Over the same period (September 30, 1998 through December 21, 2010) the S&P 500 (with dividends reinvested) is only up 50.5%).

For 2010 through December 21, my “explore portfolio” is up 20.0% YTD vs. S&P500 up 14.6% & DJIA up 10.6% YTD. The explore portfolio was roughly 70% equities for the year so the stocks in the portfolio had a banner year!

In 2009, my "Explore Portfolio" gained 33.5% while the S&P500 and DJIA gained 26.5% and 18.8%, respectively.

More from Charlie Munger:

Q: What about people who want to pick stocks?

A: You're back to basic Ben Graham, with a few modifications. You really have to know a lot about business. You have to know a lot about competitive advantage. You have to know a lot about the maintainability of competitive advantage. You have to have a mind that quantifies things in terms of value. And you have to be able to compare those values with other values available in the stock market. So, you're talking about a pretty complex body of knowledge.
Charlie Munger, From Poor Charlie's Almanack: The Wit and Wisdom of Charles T. Munger

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