Investors as Insects

How many brilliant investing insights can we glean from watching the behavior of ants, bees and other “social” instincts? How many similarities can be seen between a hive of bee activity and a huddle of investors? A column of ants marching forth and a mob of traders pursuing a trend?

Wall Street Journal:

Social insects excel at what we’ve come to call the “wisdom of the crowd,” in which a group of moderately informed individuals is more accurate than a lone “expert.” Suppose two bees each discover a different food source. As research beginning almost a century ago has shown, each bee then returns to the hive and “dances,” communicating the direction and distance of the food; when a bee in the hive encounters a dancer, she investigates that source. How does the hive figure out which is the better resource?

Suppose site B has twice the food as site A, and as a result, the scout from that source dances for twice as long. The other bees in the hive will encounter the site B scout dancer twice as often as the other bee; soon, twice as many bees investigate and return from site B as from site A, and they dance for twice as long, too. This results in four times as many bees checking out B than A, then eight times as many, then…everyone. No bee investigates both sites, yet the better site is chosen.

Read the rest from Robert Sapolsky at the link below:

Bees and Ants on How to Make Decisions (Wall Street Journal)

 

This content, which contains security-related opinions and/or information, is provided for informational purposes only and should not be relied upon in any manner as professional advice, or an endorsement of any practices, products or services. There can be no guarantees or assurances that the views expressed here will be applicable for any particular facts or circumstances, and should not be relied upon in any manner. You should consult your own advisers as to legal, business, tax, and other related matters concerning any investment.

The commentary in this “post” (including any related blog, podcasts, videos, and social media) reflects the personal opinions, viewpoints, and analyses of the Ritholtz Wealth Management employees providing such comments, and should not be regarded the views of Ritholtz Wealth Management LLC. or its respective affiliates or as a description of advisory services provided by Ritholtz Wealth Management or performance returns of any Ritholtz Wealth Management Investments client.

References to any securities or digital assets, or performance data, are for illustrative purposes only and do not constitute an investment recommendation or offer to provide investment advisory services. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others.

Wealthcast Media, an affiliate of Ritholtz Wealth Management, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. Investments in securities involve the risk of loss. For additional advertisement disclaimers see here: https://www.ritholtzwealth.com/advertising-disclaimers

Please see disclosures here.

What's been said:

Discussions found on the web
  1. Clifford commented on Nov 30

    .

    áëàãîäàðåí!