Your Opinion: Who wins - The Tortoise or the Hare

[Lusitan]

I am a tortoise, and if I had to bet (which, as a tortoise, I wouldn't) I'd put my money on the tortoises overall. No doubt a few hares will come in first place, but tortoises will fare better on average.

Oh, and as a tortoise, I sleep pretty well at night and spend very little time managing my finances.

[SecondCor521]

I guess I follow the "complicated" unclemick approach. I'm 100% S&P500 index funds across three accounts: traditional IRA, Roth IRA, and 401(k). The first two are Vanguard and the latter is SWPIX (Schwab's version).

My bellybutton thinks it can retire in about 8 years even though the spreadsheet says 15 (spreadsheet is too conservative in lots of ways).

I'd say that there are some Hares out there that have done well just because there are those 5% tails out to the right on a statistical distribution. If I had to bet money I'd always bet on the Tortoise. Of course, it depends on how you define "win" -- is it first to achieve FIRE, or is it first to achieve an arbitrarily large portfolio size? Your average Tortoise isn't going to end up with $100M. So if you think you need $100M, become a Hare. If you want to retire ASAP, I'd recommend the Tortoise route.

2Cor521
Tortoise

[cute fuzzy bunny]

Hmmm...I think you might want to consider a little hair dye Ha...

[laurence]

Quote:

Originally Posted by cute fuzzy bunny I like the process where you get to do the injecting.

Better double-bag it!

So in theory, one could win as the tortoise if you had a large amount to contribute early on in life (say, early 20's) and held it until your 60's. I agree with WC, either fear or different goals would prevent you from holding that. Nobody here ( I think ) has the goal of putting off retirement to 65, right? I mean, obviously everyone has a portfolio size goal, but with all small cap you could be 100k away from your 2 million goal and be 6 months or 6 years from reaching it.

[clifp]

Quote:

Originally Posted by chinaco 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.

Ok, I know I am taking this too literally but I just got my issue of the M* Stockinvestor newsletter. It has two portfolios called imaginatively the tortoise and the hare.

Here is the editors report on performance
"

From its inception on June 18, 2001, through July 31,
2007, the Tortoise Portfolio has returned 90.6%
compared with a total return of 33.2% for the S&P 500
Index and 37.3% for the average large-cap blend
mutual fund. Year to date, this portfolio has risen 1.4%
versus a 3.6% total return for the S&P 500. The
Tortoise has outperformed 97.9% of U.S. large-cap
blend funds since inception, but it has outperformed
only 10.5% of these funds over the past 12 months."

"
From its inception on June 18, 2001, through July 31,
2007, the Hare Portfolio has returned 62.7% compared
with a total return of 33.2% for the S&P 500 Index
and 19.7% for the average large-cap growth mutual
fund. Year to date, this portfolio has returned
5.2% versus a 3.6% total return for the S&P 500 Index.
The Hare has outperformed 97.3% of U.S. largecap
growth funds since inception and 98.8% of these
funds in the past 12 months."

So there you have it the tortoise wins. Unfortunately, I don't have many stocks in either porfolio and my performance isn't nearly as good as either portfolio. But I am better than the average large cap mutual fund manager.

[Texas Proud]

Quote:

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

Big surprise

[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..

[HFWR]

Quote:

Originally Posted by cute fuzzy bunny Hmmm...I think you might want to consider a little hair dye Ha...

And orthodontia...

[haha]

Quote:

Originally Posted by cute fuzzy bunny Hmmm...I think you might want to consider a little hair dye Ha...

Yeah, but I hadn't had enough sleep the day that was taken.

Ha

[maddythebeagle]

I vote Bunny with a pinch of Morlock....

[MasterBlaster]

Quote:

I vote Bunny with a pinch of Morlock....

Would it look something like this ?

[cute fuzzy bunny]

Ewww...Bunny Chupacabra.

Careful Maddy, if you pinch the morlock, he might fall in love...

[Mach]

I think that comparison confuses people personally. I would use a matrix of investing style, vs investing time/knowledge, and would like to know why this isn't the more common view.

Ranking investment success for an individual investor, investing their own money on average:

<<<<Least gains

4. Active/risky - little time/knowledge investing
3. Conservative - little time/knowledge investing
2. Conservative - more time/knowledge investing
1. Active/risky - more time/knowledge investing

>>>> Highest gains

Risky is higher downside AND higher upside.
Conservative strategy just dampens the highs and lows to some degree.

NOTE: This is personal investors, not large professional fund managers. Please keep it apples to apples.
If you think a fund manager who does worse than the S&P didn't do well....you may forget that they probably got a cut of the total they invested already. They already won.
That, coupled with the fact that an individual investor that isn't investing billions, has a lot more flexiblity, a huge fund manager can't take advantage of the same opportunities.

-Mach

[Spanky]

Looks like the turtle is ahead by a thin margin.

[MasterBlaster]

[ladelfina]

clifp, if these are the portfolios:
Morningstar U.S. | News Archive

they are still 100% equities, correct?
(Just so the "tortoises" with index funds and bonds like the OPs example aren't sad about not making all those gains.)

[chinaco]

Quote:

Originally Posted by Mach I think that comparison confuses people personally...

The T and H investment styles was intended to be a little "tongue in cheek" description about a serious topic. You are correct, it is not terribly accurate about a style or technique, but I think most got the general idea. I gathered that from the humorous responses.

There was an implied motive and timing that I did not state: "During the Accumulation Phase" in preparation for Retirement.

Investing is kinda like fishing. People brag on the big win, but conveniently forget about all of the trips where they caught nothing.

You are correct on the risk versus reward trade-off. Most wind up with less reward! Of course, they often wind up with additional risk that they did not factor in to the equation when trying to employ extremely sophisticated techniques... [they do not really know what they are doing]. This is the mistake that many of us made somewhere in our investing history!!! Read a book or two (or worse yet a short magazine article) and jump in. Understanding the basic concept does not make one adept at employing the technique effectively.

Now for the clincher... Aesop's fable is just as applicable to individual investors saving for retirement as it is for teaching school children about important concepts.

I know, I know, my comment is obvious... Loosen up and have fun.

[chinaco]

Quote:

Originally Posted by MasterBlaster Would it look something like this ?

I knew CFB was pretty tough in verbal pugilism... But cr@p, Now I am afraid , very afraid

[clifp]

Quote:

Originally Posted by ladelfina clifp, if these are the portfolios: Morningstar U.S. | News Archive they are still 100% equities, correct? (Just so the "tortoises" with index funds and bonds like the OPs example aren't sad about not making all those gains.)

Yup 100% equity. The press release is quite old. I subscribe but I don't necessarily recommend it. Both portfolios are real money (started with a 100K) so unlike the Motley fool and some newletter M* is not cherry picking the results. Typically each portfolio has 20-25 stocks and about 2 transactions are made per quarter so a turnover of around 30%. The 32 page newsletter is good but because it covers both domestic value and growth stocks as well as some International stocks it is spread pretty thin.

In contrast M* Dividend investor which is concentrated exclusively on either stocks and MLPs with either growing dividends (Builder portfolio) or
high-yield (Harvest portfolio) I think is terrific source of info on dividend stocks.

But yes the OP definition of Tortoise and Hare and M* are very different.

[CybrMike]

If I was younger, say 20 or 21 and had like $25K - $50K to invest, I'd probably go "riskier", like all emerging markets, small caps, and international.

Then, as my portfolio grew to $500K+, or market conditions changed (i.e. the dollar is actually worth something again), I'd switch it up to something more conservative.

Couple years ago I was 23 with a $350K portfolio. I put HUGE (think $200K) bets on google options back when the GOOG was climbing. But, my company was making $1M+ a year in profits so I guess it wouldn't have been the end of the world if I had some huge losses. But, boy did it feel good making $250K in one day. Ended up gaining about $100K that year (about 25%). But, it was all taxable at ordinary income rates, which were about 40% for me that year. Looking back now, I realize that I took huge risks and didn't really beat the market that much.

So now I've learned, and have 98% of my money in broad market, low cost ETFs.

Every once in a while it sure is fun though to buy some puts and calls ($10K nowadays) and relive the good 'ol days.

Sorry about the rambling....one to many beers.