Can investors learn from nature?
Photo: Louise Docker. Source: Wikipedia
A new book suggests that they should. Nature is infinitely resilient and adaptive, adjusting to changes in circumstances to improve its outcomes. Even in the harshest environments we find living things growing and reproducing. So we should expect the natural world to teach us some important lessons.
For example, economists have long been fascinated by honeybees. In 1705 Bernard Mandeville published “The Fable of the Bees” in which he outlined concepts like division of labor, the invisible hand, and the paradox of thrift. Condemned at the time, his work turned out to anticipate much later economic thought.
We can also learn by observing how honeybees form new hives. When they’re ready to move to a new location, they form a swarm. Individual insects spread out to gather information from their surrounding environment. Then they come back together to share this data. Eventually, the swarm collectively decides to move, and builds a new colony.
Honeybee swarm. Source: Wikipedia
The best investors are like bees, learning as much as possible about their investment universe and sharing this with their teams. They’re efficient with time and resources, but they also learn by trial and error. Also, they’re connected to their world—meeting with companies, clients, and service providers to make sure their goals and objectives are realistic and sustainable.
If we can learn from nature our investment process will be robust and adaptive. And the results should be sweet.
Douglas R. Tengdin, CFA
Chief Investment Officer
Leave a comment if you have any questions—I read them all!