Investing: A Story of the Tortoise and the Hare

There are important things in life that are changing, but because of the slow pace at which they do, we often fail to take notice until it’s too late or it becomes dangerous.

Global warming might be a good example. For all the divisiveness the topic can create, it’s still a serious issue to think about for our future generations. But because global warming happens at a truly glacial pace, we’re unable to feel the urgency. (Hopefully we do before things reach the point of no return!)

Investing might be another good example. As I pointed out in an earlier article of mine, the price of not investing can be huge. But as the positive effects of investing takes time to show up, those without the patience and tenacity to pursue it consistently often fail to enjoy the benefits.

Nursery fables contain great life lessons – the well-known one regarding the race between a tortoise and a hare has some great analogies about investing that we can draw from.

The hare symbolizes those with a short-term view – they only look at things from the surface and conclude that it’s impossible for a tortoise to win the race. Meanwhile, the tortoise does not worry about the obvious fact that he is slower than the hare; instead, the tortoise only focuses on trying to finish the race no matter how long it takes. In the fable, when spectators to the race were asked who will win, nearly all sided with the hare.

This is exactly what’s happening in the stock market. What’s popular now is the game of trading; the “art” of trying to predict short-term price movements.

I am sure trading can be a profitable endeavour for some. Yet, I can’t help but notice the lack of ultra-wealthy traders who’ve made it to the Forbes billionaires list in a consistent fashion. On the other hand, there are numerous individuals – some examples include Warren Buffett, Charlie Munger, Carl Ichan, and Henry Kravis – who have made it big by thinking long-term when it comes to the stock market. In other words, they invest. In businesses.

Given what seems to me to be the higher popularity of trading as compared to long term investing, it’d appear that the odds of success for a trader is way lower compared to the long-term investor.

Perhaps, we should all stop trying to be the hare. Instead, let’s think like the tortoise, who understood that what is truly important is finishing the race. If we have a good framework that has been known to work (like thinking of stocks as a business and having a long investing time horizon) and we stick to it consistently, investing-success may not be out of reach at all.

There're a lot more interesting things about long-term investing to chat about and if you'd like to do it in person, you can come meet David Kuo and the rest of the Fool Singapore team on August 15! 

Please join us at Invest FAIR Singapore on 15 August. (Suntec Centre, Booth B-16). Come chat with us at our booth, and see our MAS-licensed Director, David Kuo, give his official SGX investor presentation.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.