CABBAGE KEY, Florida. It's a tiny place, but boaters love it. It's quiet, protected, and far too small for cars. Indeed, this little island has a few paths but no roads. There are some cabins, a boat dock that will hold a handful of boats--- provided they don't need too much water to float--- and a small well-known restaurant.

Which is why my brothers and I have brought Magic, our chartered-28 foot sloop, here.

We're here for a cheeseburger. Not just any cheeseburger, mind you, but "a Cheeseburger in Paradise." Legend has it that a cheeseburger here is what inspired the famed Jimmy Buffett song. Many places make this claim, of course, and a quick Google search reveals that many more will make the claim in the future because, well, there's already a restaurant named "Cheeseburger in Paradise" in sunny Downers Grove, Illinois. It's a partnership between Buffett's Margaritaville Holdings and Outback Steakhouse.

So trust me, Paradise will be in your neighborhood soon and you'll be singing,

"But times have changed for sailors these days When I'm in port I get what I need Not just Havanas or bananas or daiquiris But that American creation on which I feed

Cheeseburger in Paradise Medium rare with mustard be nice Heaven on earth with an onion slice I'm just a cheeseburger in Paradise."

And if, in the middle of a hot day, you've downed your cheeseburger with a few cold ones, or perhaps a margarita, how do you manage your money? As a practical matter you can't do it the way THE OTHER BUFFET, Warren, does it. That's too demanding.

Fortunately, JIMMY Buffett provides inspiration. Just as you can manage the Couch Potato portfolio if you can fog a mirror and divide by the number "2", you can manage the Margarita Portfolio if you can make a margarita.

Although there are many abominations that don't follow the original recipe, the traditional margarita is the best. For drinking, that recipe is one part tequila, one part triple sec, and one part fresh limejuice. Trust me, you can do it by sheer force of habit once you've got the knack and have the appropriate tool for squeezing limes.

In the same manner, consider this experimental Margarita Portfolio: one part total domestic stock index, one part international stock index, and one part inflation protected Treasury securities. You can do this, at very low cost, with both mutual funds and exchange-traded funds.

If you did it with Vanguard funds, for instance, you would use their Total Stock Market Index fund (ticker VTSMX), Total International Stock index fund (ticker VGTSX), and Inflation Protected Securities fund (ticker VIPSX). Your return in 2003 would have been 26.56 percent and your losses in 2002 and 2001 would have been 6.48 percent and 7.80 percent, respectively. Your annualized rate of return over the three-year period, assuming annual rebalancing to one-third positions, would have been 2.95 percent.

This is a better showing than both the Traditional Couch Potato portfolios and in the running for the Complete Couch Potato Portfolios. (See URL for the 2003 Couch Potato Portfolio report)

Is the Margarita Portfolio a winner?

We'll have to ponder it a while. What we know is that it is simple and inexpensive; that it's 2/3rds equities which makes it a good proxy for a traditional balanced portfolio; and that having both inflation indexed securities and foreign equities means the portfolio is less exposed to the problem of inflation.

Stay tuned.

On the web:

Full lyrics to the song

Couch Potato Helps You Sleep (Report for 2003)