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How to steer clear of investment hangovers

The regimented approach the ancient Greeks would take to serious drinking when they assembled for a ‘symposium’ offers some neat parallels on why value investors prefer not to follow the crowd

16/04/2018

Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

The ‘Symposium’ is a classic philosophical work by Plato in which a group of men, including Socrates, round off a banquet by competing to see who can give the best off-the-cuff speech about love.

A ‘symposium’, on the other hand, we have learned from reading Mark Forsyth’s excellent A Short History of Drunkenness, was generally a rather less high-minded affair – although it does offer us one interesting angle on value investing.

What is a symposium?

‘Symposium’ – capitalised or not – comes from the Greek for ‘drinking together’ but that hardly conveys the scale of what could be involved.

Essentially a communal drinking session, it would start with a simple meal before everyone moved to a private room called the ‘andron’ for the serious business of the evening.

How serious? Well, sufficiently so that, in a particularly classy twist, the floor of an andron would be tiled and slope gently towards the centre of the room for, er, ease of cleaning.

All the guests would then sit or lie in a circle and the leader of the proceedings – the ‘symposiarch’ – would choose the wine to be consumed that night.

This would be prepared in a vat called a ‘krater’ while another vat filled with water – a ‘hydria’ – would also be produced so the wine could be diluted to a ratio of one to three.

After some introductory libations – in this case, the original meaning of ‘drinks poured out to honour gods’ – each man would be given a bowl filled with the diluted wine and could start to drink.

And, if you think that seems a little regimented for a drinking session, the rules do not stop there.

Follow the crowd or risk being unpopular

The drinking had to be done in unison – and only when the symposiarch said so. No refills were allowed until every guest had finished their bowl – and, as you may have guessed, not finishing a bowl was considered not only unmanly but just plain rude.

In other words, unless they wanted to risk becoming a social outcast, the amount of alcohol a guest was going to drink in an evening was completely under the control of the symposiarch.

Furthermore, the symposiarch also had the last word on every other aspect of the evening – from the topic of conversation and who had the floor to talk about it to which games the group might play.

Some nights, a symposiarch might choose to be restrained or kind and go at a gentle pace – or at least one that suited everybody present.

As the ancient Greek comic poet Euboulos neatly summed up such instances: “For sensible men I prepare only three kraters: one for health (which they drink first), the second for love and pleasure, and the third for sleep. After the third one is drained, wise men go home ...”

Some nights, however, a symposiarch might be feeling particularly thirsty – or mean – and as Euboulos continued: “The fourth krater is not mine any more – it belongs to bad behaviour; the fifth is for shouting; the sixth is for rudeness and insults; the seventh is for fights; the eighth is for breaking the furniture; the ninth is for depression; the tenth is for madness and unconsciousness.”

In other words, the rigid structure of the symposium could lead to a broad range of outcomes – sometimes pleasant, but more often less so – and ancient Greek drinking culture left participants with little option but to follow the symposiarch-led herd.

Anyone willing to be contrarian and drink at their own pace would almost certainly have had a more enjoyable evening but they would also have been considered very odd for doing so.

What's this got to do with value investing?

And of course that, in essence, is the choice value investors are faced with every day:

Take a contrary view that can feel deeply uncomfortable at the time – and may mean people think you’re strange at social gatherings - but ultimately should lead to a better investment outcome, or;

remain within the perceived comfort of the group – even if you know, deep down, that doing so is likely to leave you with a nasty headache and full of regret the next morning.

Author

Andrew Lyddon

Andrew Lyddon

Fund Manager, Equity Value

I joined Schroders as a graduate in 2005 and have spent most of my time in the business as part of the UK equities team. Between 2006 and 2010 I was a research analyst responsible for producing investment research on companies in the UK construction, business services and telecoms sectors. In mid 2010 I joined Kevin Murphy and Nick Kirrage on the UK value team.

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