The Bard of the Demand Curve

Learning economics from William Shakespeare

On the surface, it’s not unusual that John Forlines III assigns his students to read Julius Caesar. It is, after all, one of the great literary works in history.

But Forlines ’77, J.D. ’82 is an investment manager, and his students are economics majors. When they read Brutus’ famous line, “There is a tide in the affairs of men, which, taken at the flood, leads on to fortune,” they don’t discuss its eloquence or metaphorical flourish. They’re talking about market timing.

The course, “Shakespeare and Financial Markets: Why ‘This Time’ Is Never Different,” was the brainchild of Forlines, the chief investment officer of JAForlines Global, who is guest-teaching this semester in the economics department. A longtime Duke supporter with deep roots on campus—his late father, John Forlines Jr. ’39, was president of the Duke Alumni Association—he wanted to offer a unique perspective in his first teaching experience at Duke. And so the former English major turned to the Bard.

Although Shakespeare wrote more than 400 years ago, Forlines says his insights on human nature are highly relevant to understanding the vagaries of modern finance. The human behaviors and policies that have caused market bubbles in bursts in recent years are “the same ones Shakespeare addressed in most of his plays.”

Students read Henry V, for example, for its lessons on optimism— both its positive role in fueling capitalist activity and the dangers that lurk when it morphs into overconfidence and hubris. Julius Caesar becomes a primer on the economic effects of regime change and the struggle of commoners against the power of the few. And when he wants to warn students about the innate human desire to label a cause for every occurrence, he rolls out The Tempest, a stormy tale of manipulation and redemption.

“Luck and randomness have been shown to play far more important roles in finance, politics, and the global economy,” Forlines says, “and Shakespeare knew it. It’s a good thing to remember the next time some financial ‘wizard’ tells us this or that investment/economic plan is the answer.”

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