FNArena Book Review: Confusion De Confusiones

Book Reviews | Jun 14 2019

FNArena book review: Confusion de Confusiones by Joseph de la Vega

By Rudi Filapek-Vandyck 

"Confusion de Confusiones", Confusion of Confusions in English, is not the oldest attempt to describe the ins and outs of the share market, but it has over time become one of the most referenced works on speculation and trading on the Amsterdam Stock Exchange in the late 17th century.

The original account was written in Spanish by Joseph Penso de la Vega, a Jewish merchant believed to be originally from Portugal. The free spirited Netherlands, Amsterdam in particular, has long been a magnet for adventurers and outcasts that had lost their welcome elsewhere in Europe.

Once settled in Amsterdam, De la Vega's attention was drawn to the wild speculation taking place in the few equities listed, with both bears and bulls trying to outdo each other in strategy, manipulation and treachery, and with fortunes being made and lost as human foolishness, herd behaviour and greed took over from everyday common sense.

Sounds familiar? While reading De la Vega's account, one instantly comes to realise things have changed very little since the Amsterdam Stock Exchange, the first in the world, started trading early in the 17th century on the back of the establishment of the Dutch East India Company in 1602. Today investors might have access to sophisticated computer modeling, real-time data and instant access to news releases on the Stock Exchange's website, they are still human, with human flaws and emotions, and that is what makes the market, both today as it did back in 1688 when Confusion de Confusiones was first published.

De la Vega's artistic narrative, told through dialogues between a number of persons, is foremost a warning to everybody who might get hoodwinked into believing that real fortunes are up for grabs for those prepared to take on risk. It's just as much a window into the early days of share market mania and mass speculation. The title of the book leaves no second guessing about the author's view from the outside in.

Inside the inner workings of the Amsterdam Stock Exchange it's all there; from hedging, to front-running, via leveraging, stock splitting, different classes of shares, market sell-offs, temporary euphoria, bear markets, wars and recessions, rumour-trage, shorting and -both dodgy and honest- stockbroking. Really, there has been nothing new in the game since, just bigger markets, more participants, more regulation, and more money, of course.

While the narrative's format may not enthuse everyone, De la Vega's account has a lot to offer for 21st century investors curious to learn from the history of investing. Among many tidbits and insights, this book explains the origin of the expression "skin in the game".

It is believed less than ten copies of the first 1688 print of Confusion de Confusiones have survived the passing of 231 years since, but translated versions are today available on Amazon and elsewhere for only a dozen dollars or so. This book consists of less than one hundred pages in total.

Alternatively, put a search through Google and you will find electronic copies are around, at no cost for a download. It's worth keeping a copy on one's hard drive, ready for another re-read, if only to remind ourselves there's nothing genuinely new about investing in the share market, just humans trying to outsmart each other and themselves, with questionable results most of the times.

Confusion de Confusiones by Joseph de la Vega was first published in 1688. It has been reported only a handful copies of the original first print are still around today.

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