Hunting investments requires animal instincts

Although they may not be immediately apparent, there are many similarities between the world of investing and the world of wildlife. For example, we can draw parallels between growth investors and carnivores, while value investors are the herbivores of the fund management world.

There’s also a sense that survival is precarious in either environment. It’s worth remembering how many apparently established species have become extinct.

 

There is one particularly resilient brute that has survived throughout the worst of times; the crocodile. How it did so provides lessons for those of us interested in matching the achievement (and the longevity) of the tortoise rather than the hare.

 

Look closely and you’ll see certain vital characteristics shared by the beasts that survive the most hostile of eras and environments. They are often amphibious – able to survive for long periods underwater but often to be found lurking near the surface and poised for action. They ignore knee-jerk responses to short-term events, knowing that any overreaction to what is happening right now will put them at risk. They know that it’s best to step away and carefully consider the implications before deciding what the next steps should be.

 

These creatures have a wide-ranging diet. A voracious appetite for tracking down sustenance that will benefit their long-term health encourages them to explore the world for nourishment and survive on just about anything. They don’t just live off the fat of an occasional temptingly large morsel that comes their way.

It’s worth remembering how many apparently established species have become extinct.

They are armed with a strong immune system, and they’re also able to put up with toxic environments, largely ignoring the noise and other pollution that emanates from those overcrowded places.

 

These survivors also benefit from an efficient metabolism, digesting a variety of foods with potentially health-giving qualities. And they’re able to go for long periods without eating. For that reason, they don’t die if famine strikes. Another attribute is the ability to hibernate for long periods, remaining calm thanks to the cold blood coursing through their veins.

 

These ultimate champions appreciate that size and speed are vastly overvalued attributes. Animals with these traits have their moment in the sun. But, the natural survivors are the determinedly consistent tortoise and the steely crocodile which win the race and survive the risk of extinction.

Richard Sneller

Partner

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