How a Classic Fable Can Support Wise InvestingSubmitted by HearthStone | Private Wealth Management on April 25th, 2017
How a Classic Fable Can Support Wise Investing
One of Aesop’s children’s fables is the story of The Oak and the Reeds. It deals with the themes of stubbornness and flexibility. These opposite stances often relate to the investment world. The story goes like this:
A Giant Oak stood near a brook in which grew some slender Reeds. When the wind blew, the great Oak stood proudly upright with its hundred arms uplifted to the sky. But the Reeds bowed low in the wind and sang a sad and mournful song.
"You have reason to complain," said the Oak. "The slightest breeze that ruffles the surface of the water makes you bow your heads, while I, the mighty Oak, stand upright and firm before the howling tempest."
"Do not worry about us," replied the Reeds. "The winds do not harm us. We bow before them and so we do not break. You, in all your pride and strength, have so far resisted their blows. But the end is coming."
As the Reeds spoke, a great hurricane rushed out of the north. The Oak stood proudly and fought against the storm, while the yielding Reeds bowed low. The wind redoubled in fury, and all at once the great tree fell, torn up by the roots, and lay among the pitying Reeds.
What’s the moral to the story? It’s better to yield when it seems wise to do so, rather than to resist stubbornly and be destroyed.
The investment world is full of “Giant Oaks.” Their strength, size and confidence make them seem indestructible. More than just impressive, they are intimidating at times. Anybody heard of Lehman Brothers? They might be financial pundits and “experts,” name-brand investment firms, prognosticators, and media representatives. Giant oaks’ thinking can be found in investment portfolios, wherein advisors stubbornly stick to their strategy, no matter which way the wind blows.
HearthStone, on the other hand, embraces the flexibility of the Reeds. Staying nimble and malleable is far more important to us than refusing to change direction. We’re here to advise and protect clients, not defend one position or “tower” over others. We don’t find strength in standing firm when we detect change is in the air. And we believe we serve clients’ interests better by shifting when necessary, even if it means letting go of prior assumptions.
These are not unique thoughts but rather, our investment philosophy. The Chinese philosopher, Lao Tzu, held similar beliefs. Many hundreds of years ago he concluded that “The big and rigid would be overtaken by the nimble and flexible.”
No one can ever assure outcomes. But we will continue to position ourselves low to the ground and ready to bend if necessary.