Finance

The (distant) past

Josseph de la Vega's (ca. 1650 – Amsterdam, November 13, 1692) Confusion de Confusiones was published in 1688. It is the oldest book ever written about stock exchanges. It predates Saeed Amen's Trading Thalesians by 326 years!

Written in Spanish by a member of the Sephardi community of Amsterdam in the form of four dialogues between a philosopher, a merchant, and a shareholder, it focusses on the activities of the Amsterdam bourse in the second half of the 17th century.

The author clearly appreciates the importance of (different kinds of) information in the price formation process:

The price of the shares is now 580, [and let us assume that] it seems to me that they will climb to a much higher price because of the extensive cargoes that are expected from India, because of the good business of the Company, of the reputation of its goods, of the prospective dividends, and of the peace in Europe.

Furthermore,

The expectation of an event creates a much deeper impression upon the exchange than the event itself. When large dividends or rich imports are expected, shares will rise in price; but if the expectation becomes a reality, the shares often fall; for the joy over the favourable development and the jubilation over a lucky chance have abated in the meantime.