The Ant, Grasshopper and Investment

I am sure you have heard this story as a child,

“In a field one summer's day a Grasshopper was hopping about, chirping and singing to its heart's content. An Ant passed by, bearing along with great toil an ear of corn he was taking to the nest.

“Why not come and chat with me," said the Grasshopper, "instead of toiling and moiling in that way?"

I am helping to lay up food for the winter," said the Ant, "and recommend you to do the same."

“Why bother about winter?" said the Grasshopper; we have got plenty of food at present." But the Ant went on its way and continued its toil.

When the winter came the Grasshopper had no food and found itself dying of hunger, while it saw the ants distributing, every day, corn from the stores they had collected in the summer.

Then the Grasshopper knew: It is best to prepare for the days of necessity”

As children, we have been brought up on stories like the Ant and the Grasshopper, Aesop’s Fables. We have been taught that each penny counts and thriftiness pays in the long run.

Our investment behaviour has been formed based on this. Save small, regularly in low risk instruments. And you are trained to hang on to these investments for ever. Classic examples are Fixed Deposits, Gold, Real Estate, Safe but unspectacular stocks, insurance, government bonds.........


Does it work? Most of the time, the returns do not even cover the inflation. By hanging on to the investment for too long and refusing to move away from one's comfort zone, we end up losing a lot.


Let us fast forward and see what happened between the Ant and the Grasshopper in the 21st Century...

“One day, a tiny ant, was seen busily digging up the earth, preparing for her a cosy anthill, for the approaching winter. She toiled through the summer season, selecting a nice little corner for her anthill, where the mud was loose and amenable and big human feet would be far away. She set at her task through night and day, tirelessly.

Near her slowly growing anthill, was a tree on which a grasshopper lived. But, he was a wanderer. He flew to warmer climes when the winter draught creeped in and lived off the blades of grass and berries of whichever land he happened to be.

As he watched the ant, building her home, he felt sorry for her.

He knew that a day would come when the poor ant's anthill would be wiped off. And sure enough, it happened. A few days later, a huge lawn mower came to the park and a heap of grass was flung right atop the ant's anthill! The poor ant was crushed to death along with her anthill.

The grasshopper mourned her for a day and then flew on…

One of the first lessons to be learned in the investment game is to, move here and there. Look for greener pastures to feed on. If you hold on to your stocks for long, the likelihood is that when the crash comes, it will wipe out everything you have built!

Don’t marry your stock and other investments. Avoid putting down roots. They impede motion.

Be ready to jump away from trouble or seize opportunity. You do not have to bounce from one speculation to another like a ping-pong ball. All your moves should be made only after a careful assessment of the odds for and against, and no move should be made for trivial reasons. But when a venture is clearly souring, or when something clearly more promising comes into view, then you must sever those roots and go. Don’t let the roots get too thick to cut.

Mobility is the name of the game when it comes to sound investment