The Tao of the Turtle

Thought pieces from Turtle Creek

We periodically write two-page thought pieces for our investors when we believe we have something worthwhile to say. These writings cover various aspects of our investment approach and our views on the world of investing, hence the heading The Tao (the “way” or “path”) of the Turtle. To date, we have written a total of 14. They are collected here in chronological order for easy reference.

Relevant then. Relevant now.

Our thought pieces touch upon some of the key issues facing investors. Our first Tao, written during the Credit Crisis, deals with risk and is titled “How Do You Feel About Risk Now?” Three years later we wrote a part two: “Risk, a Further Discussion.” We follow the first risk Tao with a piece on intrinsic value and why we don’t worry about quoted prices in the short term.

The next two articles are our asset allocation series. In the first one, we explain why we have decided that all of our wealth, and that of our clients, should be in productive assets. For Turtle Creek this means, at this point, 100% publicly traded common equities. The second Tao explains how we go about selecting which common equities to own.

Our piece in 2011 titled “Income vs. Capital” addresses one of the key confusions among investors and was written at the time of the launch of our distribution class of units. In our latest Tao, “The Endowment Approach — Thinking Very Long Term,” we return to this theme and explain how our distribution class is designed to provide a regular cash flow to investors that will not eat into their inflation adjusted principal.

Next is a two-article series on what level of returns our investors can expect. The first takes a very long-term look at the returns from various asset classes and is a powerful reminder of why we prefer equities. The second Tao looks at how impactful it can be to modestly outperform the market over the long term.

Following the articles on returns is a four part series that focuses on our three investment edges. The first describes our security selection process, the second our valuation approach and the third our portfolio construction methodology. Some time after this Tao we separated portfolio construction into two parts; how we size an initial position (construction) and how we constantly rebalance (continuous portfolio optimization). We finish the series with a case study of one of our long time holdings.

Rounding out the collection is a Tao titled “Why the Market Gets it So Wrong, So Often.” This is our attempt to explain some of the reasons why markets are far from perfect or “efficient.”

We hope you enjoy reading The Tao of the Turtle.

Read the The Tao of the Turtle

How Do You Feel About Risk Now?
Can You Be “Right” But Forever “Wrong”?
Why We Own Equities
How We Own Equities
Income vs. Capital
What Kind of Return Can You Expect?, Part I
What Kind of Return Can you Expect?, Part II
Risk, A Further Discussion
Investment Edge 1: Security Selection
Investment Edge 2: Valuation
Investment Edge 3: Portfolio Construction
Investment Edges – A Case Study
Why the Market Gets it So Wrong, So Often
The Endowment Approach

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