What Julius Caesar teaches you about behavioural finance

Matthew Partridge explores what lessons investors can learn from William Shakespeare's Julius Caesar.


Paterson Joseph playing Brutus in a RSC production
(Image credit: Credit: Geraint Lewis / Alamy Stock Photo)

Shakespeare's Julius Caesar is based on events leading up the assassination of the Roman leader and the consequent civil war. Worried that Caesar is going to make himself king, a group of Senators persuade Brutus to take part in a conspiracy to kill him.

However, after Caesar is killed, Brutus (played by Paterson Joseph, pictured, in a RSC production) insists that they spare the life of Caesar's ally Mark Antony, who then manages to turn the citizens of Rome against the conspirators, forcing them into exile.

The key moment

At the beginning of the play, the conspirators, led by Cassius, are trying to persuade Brutus that he should join their conspiracy against Caesar. Cassius argues that there is nothing special about Caesar he is neither especially worthy nor rich that could justify his exalted status. Indeed, the only reason Caesar feels able to lord it over them all is because everyone is willing to let him. Cassius declares that "the fault, dear Brutus, is not in our stars/But in ourselves, that we are underlings".

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Lesson for investors

Our investment returns are partly determined by chance, but they are also down to our own investment choices which in turn are rooted in "ourselves". Studies have shown that people do not act rationally, but often make flawed judgements under certain conditions.

Some common ones include: recency bias (placing too much weight on recent events), confirmation bias (ignoring evidence that doesn't accord with your set views), overconfidence (overestimating your ability to achieve strong returns) and anchoring (refusing to change your mind about an investment event when the facts change).

Other financial wisdom

Perhaps the most powerful psychological flaw among investors is the bandwagon effect, where people alter their behaviour to fit in with the crowd. This can lead to groupthink, where the market effectively becomes one person rather than a group of individuals. In Julius Caesar, the Roman mob swings from begging Caesar to crown himself to supporting the conspirators before switching back to Mark Antony. This leads them into irrational, crazed behaviour, such as tearing Cinna the poet to pieces simply because he happens to have the same name as one of the conspirators.

Dr Matthew Partridge

Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.

He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.

Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.

As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.

Follow Matthew on Twitter: @DrMatthewPartri