William Shakespeare: Security Analyst

You know the story:

The grand prize is hidden behind doors number one, two or three. Pick the right door, and you’re rich. Pick the wrong door, and you get a booby prize. The stage from “Let’s Make a Deal?”

No, it’s the casket scene from Shakespeare’s Merchant of Venice. The heroin, Portia, must wed; her suitors are required to choose one of three chests. The chests are made of gold, silver, or lead, and each has a small riddle outside. If the suitor chooses correctly, he will Portia’s find portrait inside and may marry her—and enjoy her large inheritance. If he is mistaken, he must promise to forswear marriage.

We know how this story ends: the hero, Bassanio, chooses the lead casket and wins both Portia and her money—after two fruitless attempts by suitors who fail due to their insecurity or arrogance. As he examines the boxes, he comments: “The world is still deceived by ornament,” citing examples from law, religion, war, and fashion. The correct casket appeals to him precisely because it is so plain.

What investors can learn is more than “Don’t judge a book by its cover.” The unsuccessful suitors fall short because they see themselves in their choices. By contrast, Bassanio is able to get outside himself. Successful investors get past their own expectations and desires—even as they acknowlege them—and try to see the world as it is, without ornament or veil.

Shakespeare shows us how to find reality: by not looking at the flash, but the flesh behind all the numbers.

Douglas R. Tengdin, CFA

Chief Investment Officer

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