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Tony Robbins writes a Money Book centred on the All Weather Portfolio

I got to know that inspirational coach Tony Robbins just released his first book in 20 years and its on money and investing. Usually it will raised a red flag within me when I see folks that started off being an expert in one field delving into investing.

His central idea, seem to build on the all weather portfolio talked about by Ray Dalio. For those not so familiar with Ray Dalio, he runs the largest hedge fund in the world Bridgewater Associates.

The appeal of the all weather portfolio is a portfolio made up of asset classes that are lowly correlated that earns close to a respectable return yet at the same time have a significantly low volatility.

Why is low volatility important? For the average investor, a high volatility or a –50% fall in their portfolio is likely to force them to make irrationally bad decisions.

And here are the relevant statistics for the 30 year period from 1984-2013 courtesy of Robbins:

  • 9.7% annual returns
  • You would have made money 86% of the time (so only four down years)
  • Average loss of just 1.9%
  • Worst loss was -3.9%
  • Volatility was 7.6%

Tony Robbins wrote a post at Yahoo here. Ben Carlson of Wealth of Common Sense tries to do some back testing here. This is not the first time Ray Dalio was mentioned. You can view 2 past articles here and here. He got a lot of bigwigs to review his book, including John Bogle.

Update: Barry Ritholtz did a commentary on this. Apparently he focus on Robbin’s past record talking about money. It is rather interesting:

In a special video on his website from Aug. 6, 2010, titled, “An Important Note of Caution,” Robbins essentially told his viewers to get out of stocks. After lots of caveats, he said:

Right now is a time you might want to take some stocks off the table in the stock market. Especially if they are in manufacturing or retail or banking or god forbid homebuilding and housing . . . I would feel bad if I didn’t warn you . . . One of the biggest bubbles in history is blowing up now.

This turned out to be terrible advice.

The day that video was released, the Standard & Poor’s 500 Index closed at 1,121.64. Yesterday’s close was 2,051.80. Following Robbins’ advice would have caused an investor to miss a 90 percent gain, a near doubling of value. Some of the industries he recommended avoiding did even better.

Some of his other statements were odd or simply false: Perhaps the strangest statement of the video was “Most investors over a 10-year period — 95 percent — lose money.” (There are plenty of other odd and inaccurate things in the 21-minute video).

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