Melting Ice Cubes Vs. Forming Glaciers

There’s poetry in finance, if you look for it. There’s poetry in personal financial planning too. Here’s three business types to strategically understand for personal and professional gains (and maybe more importantly, for avoiding losses too). 

A melting ice cube is an idea that’s vanishing. 

A glacier is an idea that’s fortified in place and dense in structure. 

An emerging glacier is the result of the environment, compounding towards what could be generational permanence. 

Investing teaches us to deal with all three. And if you’re not an investor, you can use these too. Because anyone trading their time for money should know what form of ice they’re dealing with. 

If you invest in a melting ice cube you need a business idea for the liquified puddle (liquidations, restructurings, etc.) or a strategy to get out before the collapse (puts, long vol, etc.). Extra Ben Graham vibes. 

If you work for a melting ice cube you need to know if you want to be around when it’s a puddle or how small it can get before you need to jump. 

Melting ice cubes are easiest to see in the context of their environments. Shrinking or disappearing industries operating at a different temperature than what the ice cube requires to survive, for example. And, look for water – aka the purposeless sweat the business is shedding that has nowhere else to go. 

If you invest in a glacier you’ve found a business idea that is slowly compounding (OR slowly melting!). These are companies that have an established business model, a “quality” factor about their return on investment/equity/any pro-moat building statistic, and no way to quickly change or be changed. High quality, free cash flow growth, operating income growth, profit stability, etc. all apply here, extra Warren Buffett vibes.  

If you work for a glacier you’re at a place you can’t change except at the margins. It won’t move too fast, which should be something you value. It also doesn’t care, again – due to its size, about you as a mere snowflake on its surface. Stick around or jump accordingly. 

Glaciers are easy to spot in the context of their competitive environments. They’re the biggest (or nearly biggest) entities in an industry group, with lots to lose but extra defense compared to offense as a meta-self defense/preservation strategy. Knowing if they’re gradually adding mass or shedding it is key. 

If you invest in an emerging glacier you’re envisioning a future environment this company can grow into. And not just for the sake of growth, but because you see a category that’s taking shape and will feed the existence of new moats and durable reinvestment opportunities. These are notoriously fun to talk about but hard to predict. Extra Bill Miller vibes as he’s done this (and failed at doing this) more than once. 

If you work for an emerging glacier you’re on a rocket ship. Your little snowflake contribution means a ton when the surface area is small. But as it grows, it diminishes. The trick is to be aware of the rate of change and what you want from the environment. Don’t be afraid to get off if you’re bored or tuck in if it suits you. 

Emerging glaciers are hard to spot at their beginnings but also have a fantastic midlife before they’re too big IF you can spot them. The valuations on these get weird fast as the certainty over the new future will go in and out of vogue repeatedly (see any modern tech giant’s number of 50%+ declines over the past 20ish years). They’re always evidenced by their self-investment-driven growth. 

It’s poetic. It’s philosophical. But it’s so damn useful if you’re willing to see it. 

Ps. Are there other categories too? Absolutely. But that’s another post (with other poetic terms) for another day. 

Pss. I pulled this metaphor together for a YouTube conversation I had with Jack Forehand on, “Is Value Investing Dead?”