The Ulysses Pact

Homer's legendary story about Ulysses (Greek name Odysseus) tying himself to the mast to avoid destruction can be aptly applied to investing. Ulysses was able to hear the alluring siren songs without being led to his demise, because he made an agreement with his seafaring crew as they approached the sirens. He ordered them to plug their ears with wax and keep him tied to the mast despite his protests and cries. Under no circumstance were they to untie him. Ulysses desperately tried to break free upon hearing the sirens, but the men kept their promise, and the entire crew sailed safely through danger. They all worked together to strategically prevent their own demise.

The Siren Songs of Speculation
The Siren Songs of Speculation

The lure and noise of the financial media often drive the behaviors and decisions of investors. A Ulysses Pact is like an investment policy statement, a proactive and strategic agreement that is made between a client and advisor. An advisor can guide clients through the murky or turbulent waters and ensure they don't jump ship in response to the noise by signing a Ulysses Pact. This pact allows investors to agree up front that they will not act on emotions that can lead to irrational and wealth-destroying decisions. It can serve as a promise to one's future self to follow a passive advisor's counsel to hold on and not buy or sell as a reflexive reaction to the short-term gyrations of the market.

Step 1Ulysses PactOdysseusSiren Songs