The name of the website, Beowulf’s Treasury has been inspired by themes within the epic poem entitled Beowulf. Below is a short synopsis of the poem for those readers who may not be familiar with it.
Beowulf is an Old English poem set in 6th century Scandinavia which is an early example of Anglo-Saxon literature and does not have an attributed author.
Beowulf is a heroic warrior who is the main character of the poem who is the Prince of the Geats and later the King of the Geats. He personifies all of the best values of heroic warriors (loyalty, bravery, and honor). Later in his old age as king, he is considered a wise and effective ruler. Throughout the epic poem, he travels great distances to prove his strength and valor at impossible odds against supernatural demons and beasts. He is driven by pride throughout the story and gains treasure after each battle with these supernatural beasts, never growing tired of earning it.
When King Beowulf is an old man, a thief disturbs a great dragon that is guarding a massive hoard of treasure. The ancient treasures in the hoard guarded by the Dragon once belonged to a regional tribe of warriors who were killed in battle some 300 years before. As a result of being disturbed by the thief, the Dragon emerges unleashing fiery destruction upon Beowulf and the Geats.
Despite his age and weakness, King Beowulf goes on to fight the Dragon as his army flees. With the aid of Wiglaf (warrior), he succeeds in killing the Dragon, but at a heavy cost. The Dragon bites Beowulf in the neck, and its fiery venom kills him moments after their encounter. The Geats fear that their enemies will attack them now that Beowulf is dead. According to Beowulf’s dying wishes, they burn their departed king’s body and then bury him with a massive treasure in a barrow overlooking the sea. In the end, Beowulf gives his life defeating the dragon and gaining this impressive treasure for his people, but they do not benefit from treasure either, similar to the Dragon which had no use for it.
We have been inspired by the underlying symbolism in this epic poem which serves investors well:
- Beowulf’s tragic flaw is that he is a proud king, and continues to be awarded treasure throughout his battles, never growing tired of it (greed). Even though he is aging and weakened, Beowulf allows his pride/hubris to guide him into fighting with the Dragon (largely unaccompanied by his warriors) resulting in his death.
- The treasure of the Dragon is cursed and represents the vanity of human wishes as well as the passage of time
- Good (reward) and evil (risk) are not presented as mutually exclusive traits, but are dual qualities in everyone. These traits may change over time (risk versus reward), so it is important to pay attention to both the risk and reward of our investments at all times through prudent risk management.
This symbolism also serves us well when considering emotional and cognitive-behavioral investor biases driven by fear and greed which may impair investor judgment and decision making:
- Loss-aversion: A desire to avoid losses is near twice as great as the hope of earning a reward
- Home Bias/Conservatism: investing in comfortable/familiar securities, creating a desire to overweight domestic rather than foreign securities. The investor misses out on potentially improving long-term outcomes via investing in emerging economies and portfolio diversification.
- Herding: Our desire to align our actions to fit within a community, without considering the consequences of our actions. When faced with market volatility, an investor can ignore their long-term retirement goals, risk tolerance, and time horizon by following the crowd.
- Overconfidence: Investors may overestimate their abilities and investment knowledge, which may lead to inappropriate risk-taking and excessive trading
- Confirmation: To search for and interpret information that supports our opinion, while ignoring information that contradicts our beliefs. As a result of a narrowly focused search set for information without considering proper alternatives, this may lead to suboptimal outcomes.
At Beowulf’s Treasury, we endeavor to provide fundamental research, insights, and education to help investors to slay their market dragon and secure their treasure with proper risk management and quantitative tools to help an investor manage their emotions and behavioral biases. We will endeavor to be as transparent as possible, while maintaining the proprietary nature of our models.
Like the epic poem Beowulf, you will not be able to enjoy your riches without proper risk management and management of behavioral investor biases, if a market dragon (emotional selling during large drawdowns) or excessive trading kills you in the process.