What can investors learn from slime mold?
I was first made aware of this by reading Mitch Resnick’s book, Turtle, Termites and Traffic Jams. He talks about slime molds and how they perplexed scientists for many years. When food is abundant, slime molds operate as single-celled amoeba. However, when food becomes scarce, they cluster and they move around in this sort of blob. Whether slime mold is an “it” or a “they” really depends on the circumstances. The main lesson from this is that investors should distinguish between attributes and circumstances. For example, a low price-to-earnings multiple is an attribute. Well, sometimes a low P/E multiple is good, and sometimes it’s bad. The circumstances are more important: When is a low P/E multiple good or bad? The historical average P/E is another classic example of the attribute versus circumstance issue. If the circumstances have remained the same, past multiples are perfectly useful. If not, you’re comparing apples and oranges. What can investors learn from guppies? The story is
