Your Opinion: Who wins - The Tortoise or the Hare

[chinaco]

In the past I have employed some risky strategies for investments. Done a few things that I reflect on as kinda dumb in retrospect.

From reading on this board and others, I see a variety of strategies and approaches taken.

Based on your experience, which approach is more likely to win:

• Hare - An approach that employs a largely equity portfolio of stocks picked Maybe some EFTs and Mutual funds with a smattering of market timing based on marker greed/fear. Sometime employing some options, leverage, shorting to try to goose the gains.

OR

• Tortoise - A life long balanced portfolio index mutual fund strategy across Equity classes and Bonds that rebalances periodically and move to a bit more of a conservative as they reach old age.

I am referring to the average investor (i.e., not a professional equity manager).


It is my opinion (and experience) that the Tortoise winds up better off a majority of the time.

[brewer12345]

Probably the tortoise, especially when you look at stuff like the oft-quoted Dalbar study showing how badly retail schmoes underperform the market in aggregate by virtue of their trading activity at exactly the wrong time.

Having said that, don't discount the possibility that any given person might be a successful hare.

And then there is the Haha style of investing. I envision it as the "Morlock" investing style: spend most of the time lurking in your cave on a pile of t bills and puts only to emerge when there is a panic so that you can slurp up some of the blood running in the streets. Very effective, or so it appears, and I may eventually try it when I have built a large enough base of capital.

[Olav23]

Quote:

Originally Posted by brewer12345 And then there is the Haha style of investing. I envision it as the "Morlock" investing style: spend most of the time lurking in your cave on a pile of t bills and puts only to emerge when there is a panic so that you can slurp up some of the blood running in the streets. Very effective, or so it appears, and I may eventually try it when I have built a large enough base of capital.

This is an interesting concept, and I have been hearing more about it as of late. I think it is related to the Taleb Black Swan approach. As i understand it, he basically holds very safe vehicles, like short term govt bonds, and then takes 5-10% and bets it on long shots. This can be some options strategies, like you say with the puts, or loading up on penny stocks or biotech. It is an interesting concept for the risk averse, with still a lot of upside potential.

Anyone considering a go of this?

[eridanus]

Quote:

Originally Posted by Olav23 This is an interesting concept, and I have been hearing more about it as of late. I think it is related to the Taleb Black Swan approach. As i understand it, he basically holds very safe vehicles, like short term govt bonds, and then takes 5-10% and bets it on long shots. This can be some options strategies, like you say with the puts, or loading up on penny stocks or biotech. It is an interesting concept for the risk averse, with still a lot of upside potential. Anyone considering a go of this?

Taleb generally used options in the currency markets. If you take a look, they become very cheap fairly close to ATM.

His funds also slowly bleed out. Empirica Capital is now closed, right?

[Ed_The_Gypsy]

Quote:

Based on your experience, which approach is more likely to win: Hare - An approach that employs a largely equity portfolio of stocks picked Maybe some EFTs and Mutual funds with a smattering of market timing based on marker greed/fear. Sometime employing some options, leverage, shorting to try to goose the gains. OR Tortoise - A life long balanced portfolio index mutual fund strategy across Equity classes and Bonds that rebalances periodically and move to a bit more of a conservative as they reach old age.

Yes.

[samclem]

I've put my money on the turtle. Still, an occasional small hare-like fling helps us remember that we're alive.

[haha]

Quote:

Originally Posted by brewer12345 And then there is the Haha style of investing. I envision it as the "Morlock" investing style:

Morlocks are humanoid creatures. They don't seem to wear clothing, and are instead covered with fur. The Time Traveller describes them as "almost spiderlike" in their demeanor, in that they silently slink around in the dead of night and snag their prey. .... As a result of living underground, the Morlocks are extremely sensitive to light, and apparently have little or no melanin in their skin.

You think this is why I haven't had any lately?

Ha

[brewer12345]

Quote:

Originally Posted by haha You think this is why I haven't had any lately? Ha

Heh, wasn't trying to make personal comments, ha. But ya know, maybe some more melanin would help. I hear they have this process in Thailand where they do a series of injections...

[cute fuzzy bunny]

I'll vote for the bunny.

[Texas Proud]

Quote:

Originally Posted by cute fuzzy bunny I'll vote for the bunny.

Big surprise

[Nords]

Quote:

Originally Posted by chinaco Hare - An approach that employs a largely equity portfolio of stocks picked Maybe some EFTs and Mutual funds with a smattering of market timing based on marker greed/fear. Sometime employing some options, leverage, shorting to try to goose the gains.

Generally this approach suffers from three problems:
- Frequent trading (spreads, commissions, lack of market liquidity)
- Taxes (especially short-term cap gains)
- Excessive volatility

If you can solve those three issues with an asset allocation that isn't very correlated and doesn't require a lot of trading then you'll be eating turtle soup on the half-shell...

I think Buffett favors the Morlock approach as well.

[chinaco]

Good comments. I agree with most. There are a few hares out there that wind up better off.

For most of of mere mortals though, the tortoise model is seems to be the better approach.

For me personally, when using the Hare approach, the only thing I have experienced was a few short-term successes followed by some losses by trying to get to fancy or time or being a pig. Then the only hare I experienced was the "Hair of the Dog" (a dumb move) during the poor performance "Hangover" to try to correct things...

[Moemg]

I'd go with an aggressive tortoise .Someone with a portfolio more heavily in stocks than bonds who never goes too conservative .

[Texas Proud]

Quote:

Originally Posted by Moemg I'd go with an aggressive tortoise .Someone with a portfolio more heavily in stocks than bonds who never goes too conservative .

Wow... I was going to say a 'slow hare'... but it is the same result...

don't do the exotic stuff, but do the mutual funds etc, save and save and don't trade... but 90 to 95% stock..

[wildcat]

I agree with Moemg but it depends on what you define as "win". Are we talking risk-adjusted returns or pure portfolio size?

The Hare would win. Imagine some schmuck who stashed away his entire savings in a small value for the last 40 years. HUGE portfolio. Of course the problem is, most can't stomach the dips and crashes and this person probably would have sold out long before reaching the finish line. Also, past performance does guarantee anything so the for the next 40, it could be different but I would still bet on the Hare.

[novaman]

I'd go with the rabbit. You need to have a portion of your portfolio (maybe 10%) in a more aggressive position.... call this approach defensive aggressive (I didn't coin the phrase)
This is the approach I've been taking and it has worked out well for me so far.

[unclemick]

'God looks after Drunkards, Fools, and The United States of America.'

Dollar cost average as early as possible into something like 500Index or Total Stock Market Index with as low expenses as possible. As you get old - do something like 110 minus your age with Total Bond Index or something like that. Don't read a lot of investment books or watch the market - do your day job/career and live your life(Bon Temps Rolliere). When your belly button says retire - then retire.

Stone simple - do NOT overcomplicate the blindlingly obvious. To even further simplify the above - just buy Vanguard Target Retirement based on your age.

If you must 'win' or are male, have a hormone imbalance - take up golf, race kayaks, lie about the fish you caught, etc.

heh heh heh - there is NO total cure if you are addicted - I have a few 'good' stocks and I only buy/look on weekends - I have it under control - Right? Like the dog at the race track - even though I'm retired and it has no bearing on the results - I still chase the rabbit/buy a few individual stocks - for the dividends you know(he rationalizes).

[Goonie]

I'll go with the tortoise. The old saying, "Slow and steady wins the race" works fine for me, especially now that I'm comfortably retired. I really don't want anymore risk than is really reasonable....at least reasonable from my vantage point. I do have 2 target funds that are 77% and 87% equities, so risk is in the eye of the beholder, since I view those as reasonable, and not too risky. (for me)

Quote:

Originally Posted by unclemick Dollar cost average as early as possible into something like 500Index or Total Stock Market Index with as low expenses as possible. As you get old - do something like 110 minus your age with Total Bond Index or something like that. Don't read a lot of investment books or watch the market - do your day job/career and live your life(Bon Temps Rolliere). When your belly button says retire - then retire. Stone simple - do NOT overcomplicate the blindlingly obvious. To even further simplify the above - just buy Vanguard Target Retirement based on your age.

Unclemick's post says pretty much what I believe. Over the past few years I've tried to simplify things as much as possible. I didn't really want my money scattered all over the place, that's not saying I didn't want a fairly diverse mix. I just decided it was easier (and less headaches) to do index and target funds, rather than the smattering of a mish-mash of odds and ends. And in the end, probably not quite as risky. Plus, it's a heck of a lot easier to keep track of things now!

I've been DCA'ing for several years, and I plan to continue that, along with tossing in any extra change I can scrape up besides.

La vie est bonne!!!

[MasterBlaster]

Quote:

Are we talking risk-adjusted returns or pure portfolio size?

Size matters, just so you know....

However those without a big one claim that doing it fast can (somewhat) make up for a large one.

It should be noted also that those with large ones seem unconcerned about this topic. It's only those with smaller assets that opine incessantly about this issue. Therefore I conclude that the OP and others who concur have a deficit here and are somehow trying to rationalize their shortcomings.

[unclemick]

Quote:

Originally Posted by MasterBlaster Size matters, just so you know.... However those without a big one claim that doing it fast can (somewhat) make up for a large one. It should be noted also that those with large ones seem unconcerned about this topic. It's only those with smaller assets that opine incessantly about this issue. Therefore I conclude that the OP and others who concur have a deficit here and are somehow trying to rationalize their shortcomings.

I keep telling folks it's those stinking hormones - it's incurable(unless you're below ground) - golf, kayaks, chasing wild women, a few good stocks - however you rationalize it.

I think the first step is - ya gotta admit you have a problem or something like that.

heh heh heh - I thought those injections in Thailand were because you got something other than the 'intrinsic' value you believed you were obtaining.