Going in for The Big Kill; There's much to be learned from the hunting habits of the big cats. For one, the king of the jungle knows how to conserve energy.

Byline: Ruchir Sharma (Sharma is head of Global Emerging Markets at Morgan Stanley Investment Management.)

There's an old folk tale about a king who prepares his son for the throne by sending him into the jungle, repeatedly. At first, the only sounds the son can identify in the buzzing din are the roar of a lion and the cry of a wolf. Soon enough, he starts to pick up less obvious sounds, from

the rustle of a snake to the flap of a butterfly. But the king says his son's education won't be complete until he can hear the terror in the stillness, and the hope in the sunrise. To be fit to rule, the prince must learn to hear what doesn't even make a sound.

Students of the investing game also have a lot to gain by observing animals in the wild. In fact, it's perfectly logical for many hedge funds to have named themselves after predators, with legendary investor Julian Robertson's Tiger Management the most well known example. Laws of the jungle easily apply to the investing world and every investor aspires to be king of the wild.

They can't all be, of course. Just as only a third of the lion cubs born make it to adulthood and a tiny 3 percent of those lions go on to lead the pride, nearly two thirds of the hedge-fund industry's $1.1 trillion in assets are concentrated among the top 100--out of a total of 8,000--registered funds. The majority of new fund launches do not survive past the first year. The initial three to six months are absolutely critical and much rides on luck.

If a fund manager posts negative returns in the first few months of launch, the game is over. That's despite the fact that it's not unusual for an investor to have a poor three- to six-month spell with the bad patch often caused by externalities. Much of a cub's survival depends on the mother's ability to conceal it well in the wild and fend off other predators who want to kill the cub before it starts to compete for prey. In the investing world too, it's well understood that someone's outperformance comes at the cost of another's underperformance.

Even after the unpredictable initial phase, there is no guarantee of survival--as the events of last week show. Nine-figure losses on natural gas trades at Amaranth, a well-established fund based in Greenwich, Connecticut, led to the biggest hedge-fund crisis of this decade. Indeed, there's much to be learned ...