Speaking of Metaphors

Oh, I love those metaphors.

Once upon a time, I was reading an Aesop fable to my daughter.

The rabbit runs faster than the fox because the fox is only running for his dinner but the rabbit is running for his life.

I froze right there thinking

Hey Colgate is the rabbit and Unilever is the fox.

You see, Unilever had announced its intention to enter the toothpaste business. Market got spooked. Colgate stock fell.

An over-reaction obviously because

Colgate is the rabbit and Unilever is the fox

In a few weeks the market realised what Aesop had observed many centuries earlier. Colgate’s stock price recovered. Good trade. Thank you Aesop.

Since then I have paid a lot of attention to boiling frogs, ostriches with their heads in sand, cash cows, canaries in the coal mine, pavlovian dogs and birds that are worth more in the hand than —

I have learnt that just as bacteria can’t grow exponentially for long, businesses too can’t grow exponentially for long regardless of what investment bankers say in their pitch books. I have discovered many hedgehogs who know just one thing, will over use it, and become supremely confident and a few foxes who use a multi-model framework, will use the appropriate ones to form their world views, and will never be absolutely sure of anything.

I have learnt the importance of cash in a portfolio from Buffett’s observation that if you want to shoot a rare, fast-moving elephant, you should always carry a loaded gun.

Aesop used the story of the swallow and other birds to teach me how evil spreads and why it’s terribly important to stop it early before it’s too late.

I have found opportunities when people throw out the baby with the bathwater or paint everything with the same brush.

Catching a falling knife is dangerous. And jumping out of a plane with a parachute which opens up 99% of the time ain’t worth it. If only the partners of LTCM had thought it that way, maybe they would have acted differently.


Victor Niederhoffer has observed that

In 1997, he bet heavily on Thai stocks using large amounts of leverage. Then the Asian financial crisis arrived and he blew up for the first time.

In the fall of 2001, he sold a large number of options, betting that the markets would be quiet, and they were, until two planes crashed into the World Trade Center. Niederhoffer blew up again.

Recently, he confessed

I made so many errors there it’s pathetic. I made one of my favorite errors: “The mouse with one hole is quickly cornered.” That is key. There are certain decisions you make in life that are irreversible, that lead you into a path you can’t get out of, and unless you have more than one escape clause, the adversary can gang up on you and destroy you.


Metaphors are useful. In fact you use them more often than you realise as George Lakoff and Mark Johnson write in their classic Metaphors We Live By. To see how, just imagine the conceptual metaphor ARGUMENT IS WAR and observe how it gets embedded in our everyday language.

Your claims are indefensible.”

“He attacked every weak point in my argument.”

“His criticisms are right on target.”

“I demolished his argument.”

“I’ve never won an argument with him.”

“You disagree? Okay, shoot!”

“If you use that strategy, he’ll wipe you out.”

“He shot down all of my arguments.


Metaphorical thinking is very powerful, says Roger von Oech, author of Innovative Whack Pack.

A wonderful harmony is created when we join together the seemingly unconnected.

A powerful way to join ideas together is to make a metaphor. You can do this simply by recognising similarities between unrelated phenomena. Indeed, this is how our thinking grows: we understand the unfamiliar by combining it to what we know. The first automobiles were called “horseless carriages.” Early locomotives were dubbed “iron horses.” Metaphors can also give us a fresh insight into a problem. For example, here are three metaphors for life. (1) Life is like a jigsaw puzzle but you don’t have the picture on the front of the box to use it as a guide. Sometimes, you’re not even sure if you have all the pieces. (2) Life is like a bagel. It’s delicious when it’s fresh and warm, but often it’s just hard. The hole in the middle is its great mystery, and yet it wouldn’t be a bagel without it. (3) Life is like a poker game. You deal or are dealt to. You bet, check, bluff, and raise. You learn from those you play with. Sometimes you win with a pair or lose with a full house. But whatever happens, it’s best to keep shuffling along.

What metaphors can you create?

You can extend the LIFE metaphor as George Lakoff and Mark Johnson do.


I’ve had a full life. Life is empty for him. There’s not much left for him in life. Her life is crammed with activities. Get the most out of life. His life contained a great deal of sorrow. Live life to the fullest.


I’ll take my chances. The odds are against me. I’ve got an ace up my sleeve. He’s holding all the aces. It’s a toss up. If you play your cards right, you can do it. He won big. He’s a real loser. Where is he when the chips are down? That’s my ace in the hole. He’s bluffing. The president is playing it close to his vest. Let’s up the ante. Maybe we need to sweeten the pot. I think we should stand pat. That’s the luck of the draw. Those are high stakes.


Sometimes metaphors clash so relying on the first one that comes to mind can be dangerous. For instance, when people think of first-mover advantage, they think of the early bird — you know the one who gets the worm?

Will that metaphor work every time. No!

To see why, think of

that second mouse— you know the one who got the cheese?

Sometimes imitators can be better positioned than innovators.

The big lesson here is that you must use metaphors but not overuse the ones that first come to your mind because that would make you look just like a man (or a woman) with a hammer.

Now, you wouldn’t want to be labeled that, would you?


10 thoughts on “Speaking of Metaphors”

  1. Wisdom scores over mere knowledge. We can ignore the age-old fables and parables only at our own peril – in life, in general and in investing, in particular. They can serve as very powerful mental models. Thanks for reminding, Professor.

  2. Metaphor is the special mark of genius, for the power of making a good metaphor is the power of recognizing likeness.”–Aristotle.
    In India poet Kalidas has been known for his similes and metaphors(Upama Kalidasasya)Among the objects of metaphors, he knew exactly how much importance to give to which one. He only describes the major attribute of the thing being compared. In his Meghadhoota , he uses cloud as a metaphor for deep yearning a lover.

  3. We take our own lessons and derive a meaning that pleases our mind from any story.

    To give your words credit, the lines about “mouse with one hole” and “canary in the mine” left a deep impression in my mind about certain things I am doing. Keep up the inspiring work!

  4. Dear Sir,
    I am reminded of a phrase which ramesh Damani used in a recent conference – Keep your Gold, Keep your Silver.. But do give us your Wisdom. Great article

  5. There are always positives and negatives to an approach. It therefore is important to understand the distinction and create an appropriate risk profile for the approach.

    Metaphors are useful no doubt, they are similar to visual aids (for ex: like mind maps and others..).But there is never a exact equivalency between the situation and the metaphor. So while (like caricature) a metaphor might succeed in capturing an important point (important to us and therefore having a bias), there would be attributes which do not match and therefore in fact using the metaphor can result in unintended consequences(black swan events). So I think the use of a metaphor in a broad general sense might be appropriate when teaching or giving an interview, but one needs to be cognizant of the limitations and consequences of the wrong use of metaphor when investing or doing anything which could have serious repercussions if misapplied.

    Hope this rambling narrative made sense. Would appreciate your thoughts on this..

  6. when unilever decided to get into the toothpaste business, i guess the people who sold off probably thought of colgate as a “boiling frog” or a “one trick pony”. so, depending on which metaphor one came up with on the opposite side of the trade. metaphors deal in absolutes. thats a big problem. also, if you know enough languages, you are more likely to come up with opposing metaphors.

    in the colgate case, clearly you were right, but how did you know you this was the right metaphor to use?


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