Confusion of Confusions

What actually happened

Joseph de la Vega, a Sephardic merchant-poet in Amsterdam, wrote Confusion de Confusiones about the trade in Dutch East India Company shares: the ducaton derivatives, the bull and bear cliques, the rumor mills, the exquisite psychology of holding a losing position.

His rules read like modern behavioral finance: never advise anyone to buy or sell; take every profit with regret you didn't take more; whoever wishes to become rich in this game must have both money and patience. The 2014 behavioral-finance literature cites him as the field's accidental founder.

He wrote it, he said, partly to warn his own community, months before the crash of 1688 proved his point.

The longer arc

De la Vega came from a family of Sephardic Jews who had fled the Iberian Inquisition for the relative tolerance of Amsterdam, and he wrote poetry and religious commentary in Spanish alongside his market dealings; Confusión de Confusiones, published in 1688, was itself written in Spanish for that émigré merchant community rather than in Dutch. The book fell into obscurity for over two centuries, known mainly to a handful of bibliophiles, until a German translation appeared in 1919 and a Dutch one in 1939, each building on the prior scholar's research.

The first English edition did not appear until 1957, when Hermann Kellenbenz produced an abridged translation for Harvard's Kress Library of Business and Economics, one of only a handful of institutions in the world holding an original copy. That edition is what brought the book to modern financial historians and, decades later, to the behavioral-finance researchers who now cite de la Vega as having documented herding, loss aversion, and speculative manias three centuries before those terms existed in economics.