Spotlight: Of Investing, Bull Markets, and Smelling Trouble

Like clownfishes, while navigating their way towards home, lose the ability to sense vital smells in more acidic waters, investors lose their sense of smelling trouble during bull markets.

If you have kids, or even if you don’t, I am sure you must have watched Disney’s animated movie Finding Nemo. It tells the story of the overprotective clownfish named Marlin who, along with a regal blue tang named Dory, searches for his abducted son Nemo all the way to Sydney Harbour. Along the way, Marlin learns to take risks and comes to terms with Nemo taking care of himself.

Marlin had big reasons to worry when Nemo was abducted. This is because clownfishes live their entire adult lives nestled in the protective arms of a single sea anemone (group of water-dwelling, predatory animals named after a terrestrial flower) on a coral reef.

Between birth and adulthood, however, the fishes have to complete a treacherous journey. After hatching, a larva – a tiny, partially formed version of an adult fish – swims out of the reef to the open sea to finish developing, presumably away from predators.

After maturing for 11 to 14 days, the young one is ready to swim back to the reef and select an anemone to call home. But as it swims close, it must cross a “wall of mouths” – all kinds of creatures that lurk around the reef ready to gobble up the tiny fishes.

To successfully navigate these dangerous waters a clownfish needs to recognize the smells of the predators and avoid their grasp.

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