Nature has … some sort of arithmetical-geometrical coordinate system, because nature has all kinds of models. What we experience of nature is in models, and all of nature’s models are so beautiful. – R. Buckminster Fuller
Nature’s survival strategies that bear the most similarities to activities of market speculators are those of predators. To live, predators must hunt and this activity includes elements of speculation. Like trading, predation requires knowledge, skills, judgment and decision-making. It also entails risk and uncertainty. A predator can’t be sure where her next meal is coming from. Each hunt is an investment of resources; it involves the risk of injury and loss of energy expended in failed hunts, which tend to be more frequent than successful ones. To survive and procreate, predators must consistently generate a positive return on this investment. Too much of a losing streak could turn out to be fatal. In his book, “The Serengeti Lion: A Study of Predator-Prey Relations” George B. Schaller painstakingly documented the details of hundreds of hunts by large cats in the Serengeti National Park in Tanzania. We have all seen wildlife television programs showing lions and cheetahs hunting, but Schaller’s work offers a much richer account of the life of predatory cats including their hunting behavior.
The anatomy of a hunt
Lions prefer to hunt at night, especially when the moon is not bright. Because most of the animals they hunt can easily outrun them, lions must take every advantage of external factors like darkness, dense vegetation or the vicinity of water. While hunting, they rely on sight, hearing, and smell in the order of decreasing importance. Lions see much potential prey in the course of a day and evaluate the likelihood of catching any that appear vulnerable. “Most are given a glance,” writes Schaller, “some merit a closer look, a few elicit hunting movements, and only a very few are actually pursued.”
Lions use several distinct methods of hunting, which include ambushes, drives, runs and stalks. On occasion, lions make unexpected kills when a sick or injured animal stumbles upon them. The most common strategy is stalking, where lions attempt to approach their prey undetected. To conserve energy, lions are extremely selective about engaging in the actual chase and generally don’t charge unless they’ve been able to approach their prey undetected to within about 30 meters or less. The decision to attack also depends on the lion’s judgment of her own fitness as well as that of the prey: chases after young animals are generally longer than those in pursuit of adults. If a chase is failing, the lion is quick to abandon the attempt and only seldom pursues the prey for more than 200 meters.
The risk of injury is another important concern. To avoid violent impact, prey is almost never attacked from the front, and when making a kill, a lion is careful to position her body where its victim’s horns or thrashing hooves cannot reach her. Still, accidents do happen and Schaller reports seeing lions with broken jaws on several occasions. Such an injury is usually fatal for the predator. A lions’ success at hunting depends on a variety of environmental factors and the method of hunting. Overall, running by a single lion is successful only about 8% of the time. When stalking or ambushing, a single lion kills on about one in six attempts, but if two lions hunt together they succeed once in about three hunts. Clearly, even though most of lions’ hunts will fail, their success rates are sufficient for them to survive and procreate.Three quick notes:
Decision-making in predators and speculators
One component of a predator’s hunting that we can not observe, but which is clearly operative in every healthy animal’s brain, is the decision-making process that directs her predatory behavior. Without a doubt, this is a sophisticated and highly complex mechanism, but for our present interest, I’ll only discuss those elements that parallel the speculative activities of traders. As we have seen, lions pass much time watching their environment for an opportunity to catch prey.
When actively hunting, a lion keeps track of a variety of factors to determine when to launch an attack. The size of her prey must be large enough to justify the expenditure of energy in hunting, but must also not be too large for her to tackle safely. She must also make a judgment about an animal’s state of fitness and focus on the most vulnerable individuals.
She must also take her own fitness, speed and endurance into account, as well as a myriad of environmental factors. She may only charge when she is highly confident that her hunt can be successful. At that point the decision to launch the attack is made and she charges with full force. Her decision-making doesn’t stop there however; the lion must conserve energy and abort her hunt as soon as her confidence in making a successful kill drops below some threshold. Then the process starts over.
In terms of decision-making, a lion’s predatory behavior is similar to a trader’s speculative behavior....MORE
- You don't have to be at the market every second of every day. This is where Buffett's analogy of the baseball player waiting for their pitch is so important.
- Once you decide to move, move fast. The behemoths have gotten to the point where not only do they compete with their size but their '0-to-60' speed can probably beat yours as well.
- And although The Naked Hedgie notes a lower optimal size for a predator:
