Megan Fraser & Reuben Beelders

February 2024

It is said that in Roman times, during triumphal processions or other moments of grandeur, Roman emperors would have a slave or servant whispering “Remember, you are mortal” into their ears.

According to some accounts, during Caesar’s triumphal procession through Rome after his military victories, a slave would stand behind him, holding a laurel wreath above his head, while whispering “Memento mori” or “Respice post te! Hominem te esse memento!” which translates to “Remember that you are mortal” or “Look behind you! Remember that you are a man!”

It is a practice that reminded Roman emperors of their mortality, aiming to cultivate humility, perspective, and wise leadership. By acknowledging their own vulnerability to death, emperors were encouraged to govern with empathy, restraint, and accountability, steering clear of the pitfalls of hubris and excessive pride. The purpose of this reminder was to prevent the emperor from succumbing to arrogance, grounding them in the awareness of their mortality and the transient nature of power. Overall, this practice aimed to mitigate the dangers of unchecked power and ego, fostering a more balanced and conscientious style of governance in Roman society.

While it could be argued that this practice was an institutionalised effort to temper human nature’s inclination to lose sight of one’s humanity in the midst of fame, fortune, and adoring crowds, this is work that also needs to be done by the individual themselves as declared by the ancient Greek aphorism “Know thyself,”

In Homer’s “Odyssey,” Odysseus and his crew encounter the Sirens, dangerous creatures whose enchanting voices lure sailors to their doom. To protect his crew from the Sirens’ deadly allure, Odysseus orders them to plug their ears with beeswax. However, he wants to experience the temptation of the Sirens’ song himself, so he has his men bind him tightly to the mast of the ship and instructs them not to release him, regardless of his pleas. As the ship sails past the Sirens’ island, Odysseus hears their captivating song but remains safe due to his self-imposed discipline.

This thinking has enduring relevance in the modern world of investing. The 2008/2009 crisis is an example that serves as a poignant reminder of how easily rational thinking can be overshadowed by hubris, greed, and the allure of seemingly attractive ideas.

This crisis was caused by a mix of factors, such as the housing market crash, risky lending, and complex financial products. An important part of it was how banks packaged mortgages, including risky ones, into securities called mortgage-backed securities (MBS). They grouped them by risk and sold them to investors, making them seem safer than they were. To attract big investors like pension funds, banks even bundled riskier parts into new products called collateralized debt obligations (CDOs). But when the housing market crashed and many people couldn’t pay their mortgages, the value of these investments tanked. This mess showed that the system had big problems, like overcomplicated products and not enough oversight. It led to banks failing, governments stepping in, and a long recession.

But probably most importantly, it illustrated the importance of understanding our own limits and biases when making investment decisions. Recognising these and resisting the pull of the crowd is critical. Emotions can easily cloud our judgment, often leading to us make decisions that do not serve us well. By knowing ourselves better, we can learn to control impulses like greed and fear (including the fear of missing out), make more considered choices and ultimately protect our wealth.

Amidst mounting pressure for increased returns and higher yields, investors often find themselves in a relentless quest, squeezing every last drop of value from their assets. Yet, in this fervour, it’s easy to overlook the profound warning within the tale of the Sirens. Much like their enchanting melody lured sailors towards peril, enticing promises of higher yields can lead investors astray. Just as ships drawn too close to the Sirens’ island meet destruction, those who heed the alluring call of rickety promises may find themselves facing peril and disaster in the financial realm.

In the Talmud it is said, “Over every blade of grass there is an angel whispering, ‘Grow! Grow!” Perhaps in the new, improved AI-version of ourselves we will each have a Charlie Munger angel whispering “Memento mori”.