The mythological siren’s song enchants the wary sea traveler, tempting him closer until his ship is cast upon the rocks of a nearby island. In Homer’s Odyssey, Odysseus orders his men to tie him tightly to the mast of his ship, to plug their ears with beeswax, and not to untie him (no matter his pleas) until they pass through the treacherous strait and out of earshot from the sirens’ calls. (Spoiler alert: They make it through.)
While the sirens promised the renowned Odysseus knowledge, the sirens of today’s financial markets promise low-risk returns. Just as Odysseus commanded his men, the best way to navigate these waters is to plug one’s ears. Many opportunities look enticing—tech stocks, yield plays, short volatility—each opportunity carrying its own song, and each with the potential to bring the reckless portfolio manager to shipwreck.
Of course, we must take risks if we want the opportunity to earn a real return. This quarterly commentary will take the pulse of the market environment today as well as address the opportunities and risks we see on the horizon.