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    Imagine that it’s time to select between three tempting treasure chests of metal sitting before you. One chest is made of gold, one of silver, and one of lead. You’ll want to choose your coffer wisely, because your destiny depends on it.

    This question of value is at the very core of two Shakespearean plays, King Lear and The Merchant of Venice.

    In The Merchant of Venice, the main subplot centers on a sort of investment opportunity, if you will, of a daughter’s hand in marriage. Potential investors – the suitors – must make their selection based on perceived value, and the choice will determine their future success – or failure. Half a millennium later, you face a similar value choice each time you evaluate your investment portfolio and choose an action based on your perception of value.

    Let us consider how the genius of Shakespeare’s storytelling may give us some unexpected, even astonishing insight into our everyday work in the modern marketplace.

    In The Merchant of Venice, a shrewd father devises a test to select a husband for his daughter, the heiress Portia. Her suitors must attempt to choose correctly among three caskets or chests of gold, silver, and lead.  They assume all risk in choosing the casket and its contents, and they have little guide them other than their experience and sense of judgment.


    Portia explains, “The one of them contains my picture, Prince: If you choose that, then I am yours withal” (The Merchant of Venice, 2.7.11-12). If they choose incorrectly, the suitors must remain single, never proposing marriage to another woman. The one who chooses correctly, however, will win Portia’s hand in marriage along with her immense wealth.


    Meet suitor #1, the Prince of Morocco. He evaluates his three options and reasons that only the most precious metal could house the picture of such a beautiful woman. Portia’s picture surely could not be held in something as “base” as a lead casket, and silver is a lesser metal than gold. He reads the message on the golden case: “Who chooseth me shall gain what many men desire” (2.7.5). This must refer to Portia, he thinks. Every man in the world wants her. The Moroccan prince learns of his gross misjudgment when he opens the casket to find a skull with this message: “All that glisters is not gold.” (2.7.69). In other words, appearances are often deceiving. We should not make judgments based on face value alone.


    Greet Suitor #2, the Prince of Arragon. He dismisses lead as unworthy and the gold casket as appealing to “what many men desire.” He feels superior to the “common spirits” and so moves onto the inscription on the silver casket, which reads, “Who chooseth me shall get as much as he deserves” (2.7.7). As much as he deserves. This appeals to him! He believes he deserves the very best. “I will assume desert” (2.9.51), he thinks as he takes the key to the silver chest to unlock his fortune. In choosing silver, he lives up to the “arrogance” his name suggests.  He finds inside the coffer a portrait of a blinking idiot, and a poem that condemns him as a fool.

    Enter Suitor #3, Bassanio. He casts a skeptical eye, distrusting the rich appearance of the gold and silver caskets, and he instead selects the casket of lead, interpreting its inscription, “Who chooseth me must give and hazard all he hath,” (2.7.11-12) to mean that true love requires real sacrifice. Bassanio opens the casket to find Portia’s picture and the message, “You that choose not by the view, chance as fair and choose as true” (3.2.137-138). In other words, those who make decisions based on values other than appearances will have the good fortune they deserve.

    In the lottery of the caskets, Bassanio prevails. Why?

    The simple answer is that he is motivated by love, rather than vanity, dominance, or the lust for money. Shakespeare used The Merchant of Venice to show that real value does not lie in materialism, greed and arrogance. In Bassanio’s reasoning and his choice of caskets, we encounter a powerful contrast between appearance and reality: what appears to be valuable (gold and silver) turns out to be worthless, and what appears to be worthless (lead) turns out to be priceless.  Shakespeare, it seems, is challenging us to see beyond appearances or nominal values and to consider the motives or values in our own decision-making.

    Let’s revisit our suitors’ decisions. The perceived value “many” men associated with Portia influenced the Prince of Morocco as he chose his treasure. He used a common mental shortcut to make his decision: if others want it, it must be valuable. Therefore, he too must value the golden chest because that is the decision many others would make.

    In the investment world today, you would conclude that the reason suitor number one failed was because he submitted to “herd instinct,” which is the tendency for individuals to mimic the actions (rational or irrational) of a larger group. It’s also a flawed investment strategy.

    What can we learn from this? “Herding” is one of the most dangerous behavioral traps in the investment world because it often results in imprudent financial decisions.

    The dot-com bubble of the late 1990s is an excellent example of how herding behavior led investors to buy funds at the highs and sell at the lows. As the Internet and information technology spread throughout society, venture capitalists and investors became increasingly optimistic about the profit potential of companies that added the prefix “e-” or ended in “.com.” Euphoria sets in when investors clamor into the market because “prices can’t go down” and because “this time is different” or “this is a new era.” As history has shown us, the positive feedback loop does not last forever.

    Suitor number two, the Prince of Arragon, is a classic victim of overconfidence bias. He was smart enough to avoid the thinking errors of his peer from Morocco, and accordingly, he summarily dismissed the chest of gold because “many” men desire it. Satisfied with his reasoning ability and sure of his decision, the Prince of Arragon picked what he thought was a sure winner. Like the arrogant prince, some portfolio managers and individual investors today have a tendency to believe they are smarter and can judge market changes better than the rest.

    The classic example of overconfidence bias is how the adroit folks at the hedge fund “Long Term Capital Management,” lost billions of dollars and needed a bailout. The New York feds had to step in and rescue this group of investors, many of whom were Nobel Prize winners. Exhibiting all the characteristics of the Prince of Arragon, they were certain they could never lose more than $35 million a day. Then the bottom of their treasure chest dropped out on August 21, 1998, and the investment princes lost $553 million (Richards). They would have been wise to remember the note in the golden casket that read, “All that glisters is not gold.”

    A more familiar example of overconfidence bias is the tendency to associate the rise in value of hand-picked stocks with “skill” and the decline of underperforming stocks with “bad luck.” There are two main implications of investor overconfidence. The first is that investors take bad bets because they fail to realize that they are at an informational disadvantage. The second is that they trade more frequently than is prudent, which leads to excessive trading volume” and, consequently, diminishing returns. (Shefrin, 2000.)

    Perhaps the greatest overconfidence bias is evidenced in King Lear. The aging king places his confidence on bad bets made by rash decisions. By placing himself at an informational disadvantage, Lear sees his wealth diminish before his eyes.

    In this play, there are three daughters instead of three caskets, and their father King Lear wants to divide his kingdom among them, offering shares of his extended property based on his daughters’ avowals or “public offerings” of love for him. In this contest of boasting, the two eldest sisters, Regan and Goneril, express their love in grand and exceedingly extravagant terms while the youngest, Cordelia, is virtually mute, refusing to embellish her feelings.

    Lear found himself flattered by the profuse affirmations from his first two daughters. The princesses gilded their intentions with extravagant but meaningless words.

    Regan and Goneril represent “gold” and “silver,” and Cordelia symbolizes “lead.” When the two eldest daughters have finished their grandiloquent speeches, Lear invites Cordelia to outbid their flattery in order that she may claim the largest fortune.


    What can you say to draw

    A third more opulent than your sisters? Speak.


    Nothing, my lord.






    Nothing will come of nothing. Speak again. (Lear, 1.1.87-90)

    Cordelia’s refusal to inflate her speech sends Lear into such a fury that he disinherits her immediately and divides the kingdom entirely between Regan and Goneril. Cordelia stands mute; she will not permit herself hyperbole. She loves him – nothing more, nothing less.

    How is Cordelia like lead? Humble lead symbolizes silence, inner beauty and modesty. It is the exact opposite of gold and silver. Lead reveals that true worth lies inside, even if the outside doesn’t impress.

    In this way we associate the base metal lead with Cordelia, who refuses lofty, obsequious language by saying “nothing,” which is the verbal equivalent of “lead” and silence. Her two sister’s words are rhetorically polished, but are lies, devoid of emotion. They have no love for their father; they want his wealth for their own. Cordelia refuses to be a party to this extortion and instead, like Bassanio in The Merchant of Venice, Cordelia “hazards all she hath” (Merchant, 2.7.12); she is willing to lose her inheritance to uphold what she believes is true.

    In a contemporary world of ostentatious entrepreneurs, think of Warren Buffett as a 21st century Cordelia.  Throughout his career and his great successes, he has stayed true to his commitment to fundamental value and simplicity. He is famous for acting counter to the herd and dismissing the trend du jour in favor of quality investments he understands. In fact, Lear would have done well to heed Buffett’s wisdom about making decisions based on image.  Buffett says, “After all, you only find out who is swimming naked when the tide goes out.” For Lear, the tide goes out in the first act when he is cast from his former kingdom into the storm by the two daughters who swore they loved him dearly.

    Both The Merchant of Venice and King Lear involve money, choice, and the question of value in an increasingly materialistic world dependent on perception. The victor in each play sees beyond outward appearances to recognize inherent, intrinsic value. The lesson to be learned here goes well beyond gifting away your wealth prematurely.

    When the bottom falls out of your investments and overconfidence results in great loss, you could find yourself in King Lear’s predicament. Vanity blinded King Lear from seeing deep value in his daughter when she stood before him. Only when Lear was homeless, hungry, and desperate was Cordelia able to find and rescue him. Listen to Cordelia’s words to the King when she is reunited with him near the end of the play.


    Mine enemy’s dog,

    Though he had bit me, should have stood that night

    Against my fire; and wast thou fain, poor father,

    To hovel thee with swine, and rogues forlorn,

    In short and musty straw? Alack, alack! (4.7.34-38)

    Although Lear’s overconfidence resulted in the worst of choices, he lived to be rescued and restored by the daughter to whom he had left nothing. Only when he lay before her and the doctor – hanging between life and death – only then, did her father, finally, understand her value.

    Investors can find it easy to get distracted by the headlines that the world is coming to an end, that we must buy/sell now. You may find yourself succumbing to the temptation to compare yourself with the neighbor who just made 10{1cd8e41884a47db8d1ba9858ee640ae032d38e6ad43af2ac78fd7095779c3cb5} by investing in ABC hot company.  This world-view can whiplash us into a state of media-generated frenzy and constant panic.

    If we cannot overcome these tendencies, we at least can recognize them. Consider the value that exists outside the Wall Street world. Challenge yourself to remember that money is not a value in and of itself, but rather a symbol of existence and value. And, in the sound and fury of the market, remember to choose lead over silver and gold. Nothing else will give you authenticity and perspective as you are planning your priorities and values.




    1. Fleming, M. and Weiling, L. September, 1998. Near failure of Long-Term Capital Management. Retrieved from on 05/26/2016.
    2. Richards, C. (2013). The overconfidence conversation. Retrieved from on 05/26/2016.
    3. Shakespeare, W. (1623). King Lear. Retrieved from on 05/26/2016.
    4. Shakespeare, W. (1600). The Merchant of Venice. Retrieved from on 05/26/2016.
    5. Shefrin, H. 2000. Beyond greed and fear: understanding behavioral finance and the psychology of investing. Boston: Harvard Business School Press.
    6. Stammers, R. December 21, 2011. Three behavioral biases that can affect your investment performance. Retrieved from on 05/25/2016.