Photo: Gerhard Bögner. Source: Pixabay
There’s a passage in Homer’s Odyssey that describes the Sirens – beautiful creatures with the faces of girls and the bodies of birds. Their magical song promises untold, wonderful knowledge, but it will actually lure sailors to their deaths upon the reefs that surround the Sirens’ island. Watch out, Odysseus is warned. If he listens to them, he’ll never get home.
But Odysseus wants to hear their song. When he gets close to the island, he stops up his crew’s ears with wax, and has himself lashed to the mast so he can listen without destroying himself and his ship. As they travel past, Odysseus rages and rants, trying to desperately get free from his bounds. But the crew can’t hear him or the Sirens, and the get safely away.
In the same way, investors need to understand and prepare for the siren-songs that can shipwreck their own portfolios. Investing is an adventure, and we face all kinds of temptations along the way. Some are benign and some are more challenging. Our investment policy is a chart that keeps us on course. Staying focused on our objective, maintaining enough liquidity, resisting the urge to extend maturities or go down in credit when bonds don’t yield enough – these are traps that investors can fall for if they aren’t ready.
Investing can be simple, but it’s never easy. In his poem about Odysseus, Alfred Lord Tennyson imagines the hero taking one last journey towards the end of his life, “to sail beyond the sunset.” The poem’s final line describes what we all need to shoot for: “To strive, to seek, to find, and not to yield.”
Douglas R. Tengdin, CFA