Three rules to stop you from wrecking your investments
Tuesday, 7 July 2026
OPINION: Do you know the Greek myth about Odysseus – and how it could help your investing journey?
Odysseus knew he had to sail his ship past the Sirens, but it was a perilous part of the journey.
The Sirens were creatures who sang so beautifully that sailors would lose their minds trying to reach them, steer their ships off course, and crash into the rocks.
He had to get past them, so he came up with a plan.
He had his crew fill their ears with wax so they couldn’t hear anything. Then he had them tie him to the mast of the ship, as tightly as possible, with strict instructions not to untie him no matter what he said or did.
When the ship sailed past the Sirens, Odysseus heard the song and it was everything they said it would be.
He screamed at his crew to untie him. He begged. He probably promised them things. He was completely convinced, in that moment, that he absolutely needed to get off that mast.
The crew ignored him, they sailed past, and everyone survived.
There’s a reason this story has survived for so long. Because it tells us a few things about human nature, and how we plan for inevitable temptation.
Failure to plan is planning for failure
There’s a lot of talk at the moment about whether AI is causing a market bubble. Whether or not that’s true (and we can only usually tell in hindsight), the sharemarket will still, at some point, go down in value.
It’s just whether it happens now, or in five years.
Is that stopping me investing? Heck no.
I’m just investing with guardrails, to get maximum upside, and minimum downside.
Because just like Odysseus really wanted to hear that song, when it happens you’re probably going to want to look at that sea of red on the sharemarket results.
And just like Odysseus, you’re probably going to turn out to be a person, who reacts just like most other people.
He wanted to swim over to the Sirens. The rest of us are likely to get rather upset at seeing our investments be worth less.
It’s just human nature.
Which is then a dangerous moment for “…one little tweak could fix this, I swear…”
Odysseus knew he couldn’t be trusted to make a good decision in the moment, so he made the decision in advance, when he was thinking clearly.
Good man.
That’s what we want to do for your investments, too.
The rules below are what you can use for your mast. Adapt them as needed, but they’re a starting point that has saved many an investor’s bacon.
Rule one: the 48-hour rule
Any time you feel the urge to make a change to your investments, whether it’s to sell something, switch funds, move to cash, anything, you wait 48 hours before acting on it.
Just a pause can be all that’s needed.
If you need to formalise it more, write down what you’re wanting to do, and why.
Put it in your notes app, or an email draft to yourself, or on a piece of paper on the fridge.
Then come back in two days and read it.
Most of the time, once you’ve given yourself that break, you see that you don’t need to do anything.
The urge passes. The market moves again. The headline gets replaced by a different headline.
And by the time you come back to it, it’s clearly not the emergency it felt like at the time.
If you do still feel strongly about it after 48 hours, then it’s at least a more considered decision, rather than an impromptu panic response.
The idea is that it’s you making changes, rather than your adrenaline.
Rule two: the ‘what would have to be true’ test
Before making any change to your investments, ask yourself this one question:
What would have to be true for this to be the right decision?
Say markets have dropped and you want to move to cash. What would have to be true for that to be right?
You’d need to believe that markets are going to keep falling, and not recover, for longer than your investing time horizon (aka how long you plan to be investing for).
Or, it would need to be true that you can successfully time getting back in to the sharemarket at exactly the right moment, after the investments have finished falling, and they’re about to start climbing again.
Both of those things are incredibly hard to pull off.
Professional fund managers, with teams of analysts and decades of experience, consistently fail at both.
In fact, research shows that missing just the ten best trading days in a 37-year period would have cut your returns by more than a third.
The problem is that those best days tend to happen really soon after the worst days. So if you’re bouncing about in a panic, it almost always makes things much, much worse, than just grimly holding on to the mast.
If you’re asking “what would have to be true,” and the honest answer is “I’d have to be able to predict the future better than basically anyone ever has”, that’s maybe a sign to leave things alone?
What about in other areas. Maybe you want to buy in to something that’s been on a hot streak – what would have to be true for that to be a good plan?
That it keeps doing better than everyone else, shooting upwards, defying all odds? Or does it feel more likely that it’s had its sprint moment, and now is likely to slow down a bit?
This question isn’t designed to talk you out of everything.
It’s designed to make sure you actually have a solid reason that you could explain to someone else, rather than just acting on a whim.
Whims are damn dangerous for our money.
Rule three: the life-change checklist
My biggest rule for investing is that strategy should usually change when your life changes. Not when the headlines change.
In order to make that work, you need to know the genuine reasons to sit down and reassess.
Your own timeline changed. You were investing for something in ten years, but now you’re thinking you could manage it in two. Some of that money might need to come out of the sharemarket, then.
Your goal changed. Similar to above, but more specific. Maybe you were just thinking about building long-term wealth, but now you’re all-in on building a house deposit.
You don’t have the risk tolerance you thought you did. You’ve experienced your first market drop, and it’s made you realise something. Maybe you’ve got the bravery of a Greek sailor, and you’re ready to actually invest more aggressively. Or maybe, you lost sleep, hated every second of it, and realised this is actually not for you at all. Either one is fine, but it is important to acknowledge however you’re feeling, and (slowly, not in a panic) make changes that reflect that.
These factors are far more important than whatever headlines are yelling at us about, on a day-to-day basis.
The news is true, sure, but it’s designed to tell you about what’s happening now, and not always give the context of everything else that came before.
So it can be easy to feel like we’re in crazy, unprecedented times, and sure, it’s been a bit wild out there.
But the way we handle our money often doesn’t need to change course.
This is an extract from Frances Cook’s weekly investing newsletter, The Market Memo. You can sign up here.