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Joseph de la Vega

José or Joseph Penso de la Vega, best known as Joseph de la Vega (ca. 1650 — Amsterdam, 13 November, 1692), was a Sephardic Jewish merchant in diamonds, financial expert, moral philosopher and poet, residing in Amsterdam.[1] He became famous for his masterpiece Confusion of Confusions. Vega's work is the first study written about the Amsterdam Stock Exchange and its participants, the shareholders.[2] In a stilted style he describes the whole gamut, running from options (puts and calls), futures contracts, margin buying, to bull and bear conspiracies, even some form of stock-index trading.[3] The publication of Confusión de Confusiones helped lay the foundations for modern fields of technical analysis and behavioral finance.

Idealized portrait, artist unknown

Biography

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View of the two synagogues of Amsterdam from the East by Gerrit Berckheyde.
 
Portuguese Synagogue (Amsterdam) by Peter Schenk the Elder It is the area where De la Vega grew up.

Joseph Penso Felix was born about 1650 into a family of Spanish and Portuguese Jews; it is unknown where.[4] He was the son of Isaac Penso Félix (1608-1683) a merchant, and of Esther de la Vega (-1679). His father was a converso from Espejo, a small town in Córdoba province (Andalusia), who had made a solemn vow in the dungeon of the Inquisition that within a year after regaining his liberty he would openly profess Judaism. This oath he fulfilled in Middelburg after his escape to Antwerp.[5] He moved to Hamburg, where he married Esther de la Vega; Sara, their first child, was born there in 1645. In 1655 he was appointed parnas, not long after the family settled in Amsterdam.[6] According to the marriage certificates in the Amsterdam City Archives, Joseph had three younger brothers and four younger sisters: Abraham Penso Felix (ca 1656-1710) was a schoolmaster, a diamond seller and traded in slaves;[7][8] David (1654-) and Raphael Penso (ca 1659-) were merchants, who moved to London; Jochebet Pensa (1655-1718), Ribca Penso (1662-1720), Abigail Penso (ca 1663-1708) and Lea Pensa (1664-1710) lived in Amsterdam.[9]

Joseph was taught by Isaac Aboab da Fonseca and Moses Raphael de Aguilar, members of the Talmud Torah community.[10] He completed his first Hebrew drama, "Asire ha-Tiḳwah" ("The prisoner of hope"), in three acts, which appeared in Amsterdam in 1673 at Joseph Athias and in which he allegorically depicted the victory of the will over the passions.[11] He married Raquel Alvares Vega from Antwerp, unknown is when.[12][13] His commercial life began in Amsterdam in 1679 with a bill protest on Portugal; it is the only record on his name.[14][15] He filled the honorary offices of president of the Academia de los Sitibundos and in 1685 as secretary of the Academia de los Floridos, founded by Manuel de Belmonte (-1705), a court jew from 1674 resident of the Spanish king (who organized slave trades between 1679 and 1691).[16][17]

In August 1688 Joseph de la Vega lived through the collapse of the Dutch East India Company and Dutch West India Company, which financially ruined him.[18][19] The funding of the armed invasion of William III in England caused a financial crisis in the Dutch Republic.[20] Consequently, the financiers following William III to Britain possessed a full range of financial techniques, and for which they found a ready market indeed. This transfer of know-how formed the basis of derivatives trading in London, firmly linking Amsterdam's pioneering work to the emergence of modern markets.[21] He was buried at Beth Haim of Ouderkerk aan de Amstel.

Confusion of Confusions (1688)

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Courtyard of the Amsterdam Stock Exchange by Emanuel de Witte (1653)
 
Courtyard of the Amsterdam Stock Exchange by Job Berckheyde, circa 1670.

Written in Spanish under the title Confusión de Confusiones,[22] the volume was printed in Amsterdam and published in Antwerp. Although he did not provide a descriptive account of the process of stock trading, Joseph presented a history of speculation in stocks and ducatons, acquainting the reader with the sophisticated financial instruments used. He employed a dialogue format that enabled the reader to understand the respective perspectives of the various market participants and the intricacies of speculation and trading. There is evidence in Confusión de Confusiones of three major biases: herd behavior, overconfidence, and regret aversion.[23]

Joseph also came up with four basic principles that remain relevant today:[24]

The first rule in speculation is: Never advise anyone to buy or sell shares. Where guessing correctly is a form of witchcraft, counsel cannot be put on airs.

The second rule: Accept both your profits and regrets. It is best to seize what comes to hand when it comes, and not expect that your good fortune and the favorable circumstances will last.

The third rule: Profit in the share market is goblin treasure: at one moment, it is carbuncles, the next it is coal; one moment diamonds, and the next pebbles. Sometimes, they are the tears that Aurora leaves on the sweet morning's grass, at other times, they are just tears.

The fourth rule: He who wishes to become rich from this game must have both money and patience.

Legacy

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Joseph de la Vega, who used his mother′s last name, wrote over 200 letters to different princes and statesmen. Confusión de Confusiones remained little known until 1892, when German economist Richard Ehrenberg published an influential essay in the Jahrbücher für Nationalökonomie und Statistik entitled "Die Amsterdamer Aktienspekulation im 17. Jahrhundert."[25] According to L. Petram, Joseph devoted a disproportionate amount of attention to tricks and schemes; his book is riddled with too much drama and too many technical shortcomings to be useful as an instruction manual. Joseph wrote Confusión primarily for the entertainment of educated members of the Sephardic community (the Academia de los Floridos).[26]

Since 2000, the Federation of European Securities Exchanges [de] has awarded the annual De La Vega Prize to "young European researchers who distinguish themselves by outstanding research on the securities markets in Europe".[27]

Other works

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Other of his works include:

  • Discurso académico moral. Hecho en la Insigne Academia de los Sitibundos (Amsterdam, 1683; dedicated to Isaac Senior Texeira in Hamburg).
  • Triunfos del águila y eclipses de la luna (ib. 1683).
  • La Rosa, Panegírico Sacro, Hecho en la Insigne Academia de los Sitibundos (ib. 1683).
  • Rumbos peligrosos por donde navega con título de novelas la zozobrante nave de la temeridad (Antwerp, 1684).
  • Discursos académicos, morales, retóricos, y sagrados. Recitados en la Florida Academia de los Floridos (ib. 1685).
  • Retrato de la Prudencia, y simulacro del Valor, al Augusto Monarca Guilielmo Tercero, Rey de la Gran Bretaña (ib. 1690), printed by Joan Bus, using the rare ascendonica italic.[28]
  • Vega, José La (1692). Ideas possibles de que se compone un curioso ramillete de fragrantes flores, cultivadas y regidas por Don José de la Vega. Antwerp. This collection of short essays includes a section of five essays translated from Italian authors (Giovanni Battista Manzini, Ferrante Pallavicino, Vicenzo Pasqualigo, Antonio Lupis and Giovanni Francesco Loredan), followed by seven more that the author wrote himself.

References

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  1. ^ Biblioteca Española: Que Contiene La Noticia De Los Escritores Rabinos ...
  2. ^ Teresa Corzo, Margarita Prat & Esther Vaquero (2014) Behavioral Finance in Joseph de la Vega's Confusion de Confusiones, Journal of Behavioral Finance, 15:4, 341-350, DOI: 10.1080/15427560.2014.968722
  3. ^ De Vries and Van der Woude, p. 151
  4. ^ "Penso de la Vega, Joseph".
  5. ^ Confusion de Confusiones(1939)–Joseph de la Vega by G.J. Geers
  6. ^ Portions Descriptive of the Amsterdam Stock Exchange Selected and Translated by Professor Hermann Kellenbenz Hochschule fur Wirtschafts und Sozialwissenschaften
  7. ^ SAMUEL, EDGAR. "Manuel Levy Duarte (1631-1714): An Amsterdam Merchant Jeweller and His Trade With London." Transactions & Miscellanies (Jewish Historical Society of England) 27 (1978): 19-20. Accessed August 22, 2020. http://www.jstor.org/stable/29778893.
  8. ^ Notariële archieven, archiefnummer 5075, inventarisnummer 4774, aktenummer 62648
  9. ^ https://www.dutchjewry.org/genealogy/vega/281.shtml; https://www.dutchjewry.org/portuguese_israelite_cemetery/p.shtml
  10. ^ The Anglo-Dutch Moment: Essays on the Glorious Revolution and Its World Impact by Jonathan Irvine Israel, 451
  11. ^ Portions Descriptive of the Amsterdam Stock Exchange Selected and Translated by Professor Hermann Kellenbenz Hochschule fur Wirtschafts und Sozialwissenschaften
  12. ^ Confusion de Confusiones(1939)–Joseph de la Vega by G.J. Geers
  13. ^ Rachel Penso Felix died on 12 September 1703.Notariële archieven, archiefnummer 5075, inventarisnummer 5890, aktenummer 606589
  14. ^ Notariële archieven, archiefnummer 5075, inventarisnummer 4875, aktenummer 48786
  15. ^ Teresa Corzo, Margarita Prat & Esther Vaquero (2014) Behavioral Finance in Joseph de la Vega's Confusion de Confusiones, Journal of Behavioral Finance, 15:4, 341-350, DOI: 10.1080/15427560.2014.968722
  16. ^ Confusion de Confusiones(1939)–Joseph de la Vega by G.J. Geers
  17. ^ Conectores sefarditas en una monarquía policéntrica. El caso Belmonte/Schonenberg en la articulación de las relaciones hispano-neerlandesas durante la segunda mitad del siglo XVII by Manuel Herrero Sánchez
  18. ^ Teresa Corzo, Margarita Prat & Esther Vaquero (2014) Behavioral Finance in Joseph de la Vega's Confusion de Confusiones, Journal of Behavioral Finance, 15:4, 341-350, DOI: 10.1080/15427560.2014.968722
  19. ^ J.I. Israel. ‘The Amsterdam Stock Exchange and the English Revolution of 1688.’ In: Tijdschrift voor Geschiedenis 103 (1990): 412-440
  20. ^ The Anglo-Dutch Moment: Essays on the Glorious Revolution and Its World Impact by Jonathan Irvine Israel
  21. ^ Amsterdam as the cradle of modern futures and options (1550-1650), p. 15 by Oscar Gelderblom and Joost Jonker. Utrecht University, 2005
  22. ^ It is possible to read it in a full view mode here [1].
  23. ^ Teresa Corzo, Margarita Prat & Esther Vaquero (2014) Behavioral Finance in Joseph de la Vega's Confusion de Confusiones, Journal of Behavioral Finance, 15:4, 341-350, DOI: 10.1080/15427560.2014.968722
  24. ^ Portions Descriptive of the Amsterdam Stock Exchange Selected and Translated by Professor Hermann Kellenbenz Hochschule fur Wirtschafts und Sozialwissenschaften
  25. ^ The First Book to Describe a Stock Exchange By Sotheby's
  26. ^ Petram, L.O. (2011) The world's first stock exchange: how the Amsterdam market for Dutch East India Company shares became a modern securities market, 1602-1700
  27. ^ Antoine Gattolliat (2011-06-16). "FESE - De la Vega Prize". Fese.be. Archived from the original on 2012-10-23. Retrieved 2012-10-18.
  28. ^ Detail from John A. Lane

Source

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