“The learned among them confess the absurdity of this doctrine, but the practice still continues, in compliance to the vulgar.”
Lemuel Gulliver, 1726
Pet names that started with the letter ‘V’ were decidedly bad luck for would be marriage candidates to Jonathan Swift, the Irish satirist and author of masterpiece Gulliver’s Travels. Though born seven months after his father’s death in 1667, Swift’s young life took several fortuitous turns that led to his meeting the love of his life. His journey started with such poverty and poor health as to land Swift with Meniere’s disease, which causes dizziness, vertigo, nausea, and hearing loss affecting the inner ear. At a tender age, he was sent to live with his uncle, Godwin Swift, who supported him and gave him the best education possible. This was the first critical departure his life would take, allowing Swift to eventually study at the Trinity College in Dublin where he earned a B.A. degree. The Glorious Revolution of 1688 cut short his aspirations to further his higher learning.
The political unrest prompted a move to Leicester, England, where he came under the employ of his life’s most important connection, Sir William Temple, a retired diplomat. Living at his home in Moore Park, Surrey, Swift was placed in the pathway of many politically influential people. But it was also in his new home that he, all of 22 years of age, was introduced to Stella, the daughter of a fellow employee who was only six years old at the time, and her younger sister Anne. Their friendship was fast, and Swift became her tutor and mentor. In the meantime, Sir Temple used his influence to help Swift gain admission into Oxford University. In 1692, Swift graduated with a M.A. degree and was swiftly deposed to a one-year stint as an Anglican priest in the parish of Kilroot near Carrickfergus in Antrim in Northern Ireland.
Being of a suitable age, he became engaged to marry the sister of a friend, Waring Swift, whom he met in his capacity as rector. Alas, the union to his affectionately named ‘Varina’ was not to be, and the two mutually consented to part ways. ‘Vanessa,’ whom he met in 1707, would prove to be a more formidable challenge. Hesther vanHomrigh, whom he met in 1707, would prove to be a more formidable challenge. This strong willed young woman was the wealthy daughter of a merchant who had passed some time before she became acquainted with Swift at the age of 20; she was 22 years his junior. As for her personal riches, the success of King William’s war in Ireland in the early 1690s afforded her dearly departed father the opportunity to build a fortune from a series of land and property forfeitures.
So enamored was the young Hesther, she followed her heart, relocating to a house called Marley Abbey, about 15 miles outside Dublin, to be close to the man of her dreams to whom she (modestly) declared she was his for the having should he be inclined to propose. While their relationship would span 17 years, regrettably, for ‘Vanessa,’ Swift was decidedly disinclined after her insisting that he sever ties with his beloved Esther Johnson, known as Stella to her friends.
Long before becoming acquainted with Vanessa, Swift’s friendship with Stella, started so many years earlier, had prompted her to buy a house in his parish of Laracor. There, she resided with her constant companion Rebecca Dingley, who was diligent to always be present in the company of Swift and Stella to preserve decorum. While it is said that they secretly married, no proof to such effect was ever found. In 1727, Swift abandoned his promoting Gulliver’s Travels to rush to Stella who had fallen ill. A year later, she died, leaving him mentally destitute.
But we will always have Swift’s sage words, which convey a wisdom that all of time cannot render irrelevant. Above all, he valued the learned soul who never felt secure enough to stop learning. “Blindness in addition to courage conceals dangers…,” he warned, “…affecting greater import than is possessed.”
In no field has such hubris more played out than that of investing. We’ve secured our collective fortunes by losing our way en masse. There was a time that random applied. The riches of inefficiencies effectively exploited and arbitraged were rewarded to the best in class among fundamental analysts. Cheapening valuations amidst the known knowns among this closed coterie of Wall Street gods invited buying opportunities that ultimately manifested in value-add, or alpha, a trite concept in today’s financial markets. Richening induced opposite moves as the denizens of outperforming portfolios, once known as the ‘smart money,’ pocketed profits before the hoi polloi caught on to trimmed expectations.
While there may be a distaste left in your mouth after reading such a depiction, you’re no doubt familiar with the construct. As “unfair” as active management once was, we would not openly mourn its demise if the way of yesteryear’s world was still intact. Alas, the ballsy combination of brain power and bravado is somewhat passe, at least in the sense of being odd man out in the not-brave new world of passive investing.