What Hamlet teaches you about bankers

Hamlet

Shakespeare’s Hamlet was written between 1599 and 1602 and tells the story of Hamlet, Prince of Denmark, whose father has died in suspicious circumstances, with Claudius, Hamlet’s uncle, assuming the crown. Hamlet meets his father’s ghost, who informs him that he was murdered by Claudius. Later on Hamlet mistakenly kills Polonius, a government minister, prompting Polonius’s son Laertes to challenge Hamlet to a duel. This culminates in the death of Hamlet, his mother, Laertes, Claudius, as well as the invasion of Denmark by a Norwegian army.

The key moment

In Act 2 Scene 3, Polonius is giving lectures to his daughter Ophelia and son Laertes. He tells Ophelia, who is in love with Hamlet, that she should not take the “trifling of his favour” seriously since it is “the perfume and suppliance of a minute, no more”. He says Hamlet’s words “are brokers/Not of that dye which their investments show/But mere implorators of unholy suits/Breathing like sanctified and pious bonds/The better to beguile”.

Lessons for investors

The financial-services industry at the start of the 17th century was much less sophisticated than it is now, but people still issued and traded various financial instruments, such as bills of credit and insurance policies. Indeed, there were flourishing bond markets in France, Italy and the Netherlands, with Amsterdam hosting the first publicly traded company in 1602. Evidently, brokers and bankers were as little regarded then as they are now. Some modern editors think Shakespeare meant to say “bawds” instead of “bonds”. Still, this edit actually strengthens the force of the comparison between bankers and pimps.

Other financial wisdom

The same scene is notable for Polonius’s advice to his son that “neither a borrower nor a lender be/For loan oft loses both itself and friend/And borrowing dulls the edge of husbandry”. Naturally, it is impractical to follow this advice to the letter. Studies by American investor James O’Shaughnessy, however, have shown that companies with high levels of debt tend to have low future returns. There may be something in Polonius’s advice after all.