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Staying the course

On 5 December 1914, the crew of the Endurance set out from South Georgia on an expedition to traverse the Antarctic continent, one of the last frontiers in the golden age of polar exploration. Lead by Ernest Shackleton, his hand-picked crew (thought to be 27 strong at the time, later found to be 28 thanks to a stowaway) had allegedly signed up for ‘a hazardous journey, low wages, bitter cold and long hours of complete darkness’. By 19 January 1915, the ship had not reached the continent; it was frozen in pack ice, never to sail again. On its own, this was clearly a problem, however, it turned out to be just the first of a many challenges. The narrative ‘hazardous journey’ came nowhere close to describing what came next. Shackleton’s trans-Antarctic expedition is an awe-inspiring saga of resilience and survival. His effort to make sure his entire crew made it home safely is frequently cited as one of the greatest examples of leadership under extreme pressure.

On first being trapped, Shackleton initially engaged his men in constant activities, both work and play, whilst camping on the ice waiting for the coming thaw. He was also willing to take risks and disrupt the status quo. In the early twentieth century, as it is today, there was a strict hierarchy aboard ships like the Endurance. Shackleton saw this as an impediment to the unity needed to be successful, so he discarded those norms and treated everyone equally. Importantly, he also gave them a new shared mission – to keep every man alive

Following months trapped in the ice, the situation became worse, as Endurance began to be crushed and eventually sank on 21 November 1915. When the thaw eventually came, the crew set out in three lifeboats, carrying almost no provisions, to find dry land. Now April 1916 and after five days at sea in temperatures of -30c, they reached Elephant Island, only to find this a desolate place, inhabited mostly by penguins.  It was soon very clear there was no chance of rescue. On 21 April, Shackleton along with a 5-man crew, set out from Elephant Island aboard a 6.9m long lifeboat, the James Caird. Their destination was South Georgia, some 800 miles away.

This is where the story becomes truly epic. In this tiny boat and facing mountainous seas in the Southern Ocean, the crew navigated the journey using a sextant to calculate their position; an instrument that measures the angle between the sun and the horizon, but the former was rarely visible because of almost constant cloud cover. If the boat veered a small way off course and missed South Georgia, it would be carried into three thousand miles of open sea. The sailors did have a primitive compass, but at night they could only check it one or two times, as there were few candles and matches to spare. In the darkness, the crew steered the boat ‘by the feel of the wind and by observing the angle of the pennant that flew from the masthead’.

Despite only taking 3 ‘confident’ readings, the James Caird miraculously landed on the west coast of South Georgia, 10 May 1916. Shackleton, however, knew civilisation, in the form of the Stromness whaling station, was on the east coast of the island. He, alongside two of his men, took on the perilous challenge of traversing a vast expanse of glaciers to reach the whaling station. After 36 hours, without sleep or shelter, the three foul-smelling men reached their goal at 16:00, 20 May. The saga, alas, did not end here. More sea ice and poor weather initially prevented him from returning to rescue his men. Shackleton eventually returned to Elephant Island aboard a Chilean steamer, the Yelcho, on 30 August 1916, some 2 years and 22 days after Endurance had first set sail from England. He had saved every single member of the crew.

Why recount this story now? 

Throughout this remarkable journey, Ernest Shackleton demonstrated a number of traits required of extraordinary leaders, including his ability to set standards by his own example and displaying extreme care for the wellbeing of his team. However, the most admirable quality displayed was his resilience; as things became progressively worse, he became ever more able to use his internal resources to bounce back.

There are some interesting parallels with the succession of crises Shackleton endured and the challenges today, in the face of the COVID-19 pandemic. Just as he and his crew found themselves stuck in the ice and unable to reach their goal, numerous countries today are seemingly “stuck” in a state of crisis. Public health issues are ongoing and likely to remain so for some time yet. What is considered the more humane option has been to navigate the course through an economic recession, resulting in high unemployment, corporate failures and levels of government debt that will not be repaid for decades, if ever. We can argue about the whys and wherefores in terms of the positions countries have adopted and the plight communities now find themselves in, but the key issue is how policymakers and other important stakeholders collaborate going forward. Global leaders, competing businesses and divided societies are having to work together to address issues of shared concern. For Shackleton, the focus was always on the future and rallying around a single purpose of getting his men home. He did not dwell on the past, second-guess decisions, or look for blame. Some of our leaders could learn a lesson or two from this approach.

Returning to resilience, psychologists define this as the process of adapting well in the face of adversity, trauma, tragedy, threats or significant sources of stress. The Endurance saga is a great example of a group of people demonstrating remarkable resilience. Shackleton knew that the stresses of the situation could lead to low morale and infighting, and that disunity would prove more of a threat to his crew than the Antarctic winter. Thus he constantly worked to build a sense of “we”. In exchange, his crew literally followed him to hell and back and never doubted their leader. It has been interesting to observe governments around the world highlighting the importance of collective societal action to fight the spread of disease. One could argue those societies living under benevolent dictatorships have responded more quickly to this rallying call of we; more so than populations of some of the western democracies, at least initially. However, the message does appear to have been increasingly accepted and the number of acts of kindness and level of community volunteering is testament to the multiplier effect collaboration can bring.

Are there parallels with building resilience in portfolios?

Striving to achieve an objective, adapting to change, overcoming adversity and reacting to threats are all challenges faced by investors exposed to financial markets. As we have said many times, during periods of enhanced price volatility and portfolio drawdowns, human emotions are the dominant driver of prevailing market behaviour. During these periods, it is important to concentrate on the facts and not waste energy trying to understand, or predict the unforecastable. 

Part of the foundations of our investment process is a focus on ‘behaviours, not labels’ in terms of the individual funds making up the investment strategies we manage. How these then behave as a collective, across diverse market conditions, enables us to assess and enhance the resilience of our portfolios.      

Staying the course 

Just as important is the concept of time in the market, not timing the market, in order to generate positive long-term returns. However, many investors find it hard to stay the course when performance worsens, invariably resulting in detrimental outcomes. This concept is well illustrated by the this chart from PIMCO, one of our approved fund managers. It contrasts the result of staying invested through the painful time that was the Global Financial Crisis, with trying to de-risk and then time re-entry.

Time in the market versus timing the market 

As an investment team, our shared mission is to steward our clients’ capital through challenging environments; remaining invested, whilst mitigating downside risk and taking advantage of opportunities as and when they present themselves. Whilst the world asset managers currently inhabit might feel inhospitable, it is nothing compared to the one which Shackleton and his crew endured. We should take inspiration from their stoicism, whilst being accepting of our new reality and maintaining optimism that the problems we face today will be resolved over the longer-term.

Please do contact us with any questions. 

Julia Warrander and Russell Waite

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