Have you heard of the Ulysses Pact before?
A Ulysses Pact refers to an agreement Ulysses the legendary Greek King made with his men as they approached the Sirens.
The Sirens were beautiful women and dangerous creatures that lured nearby sailors to their death with their enchanting songs. You’ve probably heard of the "call of the Sirens" before.
Ulysses wanted to hear the Sirens song although he knew it would make him incapable of any rational thought and ultimately would kill him. So, he put wax in his mens ears so they couldn't hear and he had them tie him to the mast of the ship so that he couldn’t jump into the sea when he heard the songs. He then ordered the men not to change course under any circumstances and to keep their swords pointed at him and attack him if he breaks free.
When Ulysses heard the Sirens song it drove him insane and he struggled and he fought with every ounce of strength to break free so that he could go and join the Sirens in the sea which of course would have meant his death.
Why am I telling you this and how can it help us? The Ulysses pact is a promise you make prior to an event. You know there’s a chance you’ll act irrationally at a future point, therefore you want to create this promise with yourself beforehand, aka a Ulysses pact. So Joe, I hear you ask.. what has that got to do with finance?
Good question.
Successful investors create a Ulysses pact with themselves and in essence it will say something like this;
I will never sell my investments as a result of market conditions or economic conditions, I will only ever sell an investment portfolio if my financial plan dictates and I need the cash to support my lifestyle
A prime example being last year, when my advice to anyone then was, do nothing. Don’t panic, this is temporary. Things will come back, and lo and behold, the world hasn’t ended.
Investing should be a long term thing, the drops are temporary, the rise is permanent. If you stick to the plan - it works. Don’t be trying to “time the markets” because that doesn't!
Life Lessons from Greek Mythology.
Thanks for reading,
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