Veni, Vidi, Vinci: Investing lessons from Julius Caesar

“I came, I saw, I conquered.” This famous quote is attributed to one of the greatest military minds the world has ever seen: Julius Caesar. While Caesar lived centuries ago, lessons from his conquests can be directly applied to the Game of Thrones-like modern world of investing.
Vidi, I came. Julius Caesar conquered lands stretching from the deserts of the Middle East to the Alpine mountains of Europe. Modern day nations and continents such as Spain, France, Egypt, Greece, England, Asia and Africa fell to his mighty Roman Legions. Caesar encountered a wide variety of cultures, climates, and uncertainty when he travelled to these far-off destinations. He often entered unchartered territories, not knowing the great risks that would await his armies. His greatest risk occurred in 49 B.C. when he decided to cross the Rubicon River. According to Roman law, it was treason for a general to attempt this with a standing army. Caesar crossed and Rome’s republic was torn apart. A bloody civil war ensued. Before making the crossing, Caesar famously declared, ” Let us go where the omens of the Gods and crimes of our enemies summon us, the die is now cast.”

Though not as dangerous as Caesars military campaigns, the financial arena can very daunting to the individual investor. Uncertainty is abound and, like the complexity of Caesar’s conquered territories, choices are endless and confusing. 401k, 403b, IRA, Roth, 529 and Single-K are like the foreign languages Caesar had to translate on his journeys. What about a broker or a fee-only planner? Like in Caesar’s day, if one chooses the wrong ally, the results could be lethal. Investor-friendly companies like Vanguard and Dimensional Funds vs fee-hungry institutions, like Merrill Lynch and Morgan Stanley, inhabit the same territories. Which financial army should you follow and trust your exposed flank to? Caesar had to weed through competing tribes to determine which would give his armies the most support and have the least conflict of interests. Does this sound familiar?

Vidi-I saw. Caesar saw the results of bad decisions. Actually, his nephew and adopted son, Octavian, experienced Rome’s worst nightmare. In the dark German forest of Tetoburg in 9 A.D., three entire legions of crack Roman troops were caught in an ambush by the “Barbarians” and completely annihilated. Arminus, their leader, completely outflanked the Romans and delivered Rome’s worst defeat. The Roman leader, Varus, seeing that all hope was lost, fell on his sword and committed suicide. Since the Legion’s strength was its incomparable discipline, without its leader, the army broke apart and was slaughtered. When reinforcements finally arrived, they found the chilling spectacle of “barbarous altars of heads nailed to trees,” according to the Smithsonian. The Barbarians were completely misjudged, their affection towards the Romans was a clever ruse and they were far from barbarians. They fought in organized military units with purpose and resolve. The legend of Rome’s invincibility was forever shattered.

How does the Romans’ mistake in Germany compare to what might await the ill-informed and vulnerable investor? The answer, surprisingly, is that their situations have many similarities. Like the Romans in the Tetoburg, investors are often alone surrounded by dangerous enemies waiting to ambush them. Salesman skilled in persuasive tactics, rather than military ones, feign friendship while looking to separate victims from their money. Selling Class, A, B, and C funds, and making their clients pay enormous fees for underperforming funds, is a trick that not even Arminus could conceive. Not explaining that they are not fiduciaries and are not required by law to act in their clients’ best interest makes the false allegiance of various tribes in the conquered territories look like child’s play in comparison. Hedge Funds plunder their victims with fees of 2% and by taking 20% of profits, which make the Barbarians look downright civilized! What can we learn from Caesar in how he dealt with such lethal enemies?

Vinci- I conquered. There is a story about Caesar; when he was in his twenties he was captured by pirates for ransom. After he was released, Caesar raised an army, captured his tormentors, and proceeded to crucify every last one of them. I am sure there are many investors out there who would like to do this to an insurance salesman after they realized they were paying 4% fees on these products. Since we have rule of law, as did the Romans, there are other solutions which won’t involve lengthy prison sentences. Caesar’s most deadly strategy was to have his legions surround the enemies. He would then build a wall outside of the range of his opponents’ archers and proceed to bombard the area with basically everything that was not nailed down. This resulted in either surrender or death, since all resources were cut off. An investor could use this blueprint to combat those trying to separate them from their money. The investor’s wall would consist of knowledge not artillery. Educating oneself on the difference between an advisor who sells “suitable products” and those who are fiduciaries, like fee-only registered investment advisors or financial planners, would be step number one. Like Caesar’s various conquests, the wise investor could follow a strategy to divide up his assets between stocks, bonds, and cash according to his risk tolerance and time frame. This would avoid putting all the eggs in one basket. Rome avoided this by having a far-flung empire which stretched across the civilized world . Finally, like Caesar keep your costs low. Caesars’ armies collected tribute from the territories to offset the expense of conquest. They lived off the land which supplied them with vast resources and saved them huge amounts of denarri. Modern day Caesars can devise a portfolio strategy similar to the legions. Use low-cost index funds and NEVER buy any product with a sales load. These products are readily available from true allies, like the Vanguard group and a few others.

Caesar understood that Rome was not built in a day and he implemented lasting strategies that were meant to pay dividends to the Empire for years to come. Proof of this is in the Roman roads and bridges, which are still standing today. Investing is also meant for the long term. Short-term excitement is fleeting and usually has disastrous results. If you are ever in doubt of this, remember Caesar’s words, “It is easier to find men who will volunteer to die, than to find those who are willing to endure pain with patience.” Endure the short-term market pains, and the traps of conflicted salespeople, and your patience will be rewarded many times over. Who knows, maybe you will be able to build your own financial empire using these lessons from the past.