Joseph de la Vega

Idealized portrait, artist unknown

José or Joseph Penso de la Vega, best known as Josseph de la Vega (ca. 1650 — Amsterdam, November 13, 1692), was a Sephardi Jewish merchant in diamonds, financial expert, moral philosopher and poet, residing in 17th century 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 Confusion de Confusiones helped lay the foundations for modern fields of technical analysis and behavioral finance.

Biography

View on the two synagogues of Amsterdam from the East by Gerrit Berckheyde. It is the area where De la Vega grew up.

Joseph Penso was born about 1650 into a family of Spanish and Portuguese Jews.[4] He was the son of Isaac Penso Félix (-1683) and of Esther de la Vega (-1679) who was a relative of the Vegas that founded a Talmudic school in Livorno. His father was a converso from Espejo, a small town in Córdoba province (Andalusia, Spain), 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 seems to have fulfilled in Middelburg after his escape to Antwerp.[5] He moved to Hamburg, where he married Esther de la Vega.[6] Sara, their first child, was born there in 1645.[a] In an unknown year the family settled in Amsterdam.[b] According to the marriage certificates in the Amsterdam City Archives, Joseph had three younger brothers: Abraham (ca 1656-1710) was a schoolmaster and a diamond seller;[9] David (1654-) and Raphael (ca 1659-) were merchants, who married on the same day in December 1687 two sisters Alvares Vega from Antwerp.[c] Between 1700 and 1710 they acted as agents in London for Dutch investors.[11] The former moved to Dublin, see Ballybough Cemetery.

Joseph was taught by Isaac Aboab da Fonseca and Moses Raphael de Aguilar, members of the Talmud Torah community.[12] When in his eighteenth year he completed his first Hebrew drama, "Asire ha-Tiḳwah" ("Pardes Shoshannim"), in three acts, which appeared in Amsterdam in 1673 (2d ed., Leghorn, 1770), and in which he allegorically depicted the victory of the will over the passions. He married Rachel Alvaro (Alvares?)[13] His active commercial life began in Amsterdam in 1679, perhaps in 1683.[14] He became a respected merchant and an elegant Spanish poet, and 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.[15] Joseph de la Vega, who used his mother′s last name, wrote over 200 letters to different princes and statesmen, and was a prolific author, "the marvel of the academies, who made his work proof against criticism by presenting his subject in ordered form; delicate in his sentiments and of true refinement", as De Barrios ("Arbol de las Vidas", p. 90) characterizes him.

In August 1688 Joseph de la Vega lived through the collapse of the Dutch East India Company (Vereenigde Oostindische Compagnie, or VOC) and Dutch West India Company (Geoctrooieerde Westindische Compagnie, or GWC), which financially ruined him.[16][17] Likewise, Coenraad van Beuningen also lost half a million guilder in 1687/8 through speculation in VOC shares, and wrote letters to the ecclesiastical authorities about the end of time and painted Hebrew or Kabbalistic signs on his house.[18] The funding of the armed invasion of William III in England caused a financial crisis in the Dutch Republic.[19] 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.[20]

Confusion of Confusions (1688)

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

The book is written in Spanish; its original title is Confusión de Confusiones.[21] It was printed in Amsterdam, but published in Antwerp. Although not a descriptive account of the process of stock trading, Joseph presented the history of speculation in stocks, ducatons and acquainted the reader with the sophisticated financial instruments used. The dialogue format allowed the reader to understand the respective perspectives of the various market participants and the intricacies of speculation and trading. There is evidence in Confusion de Confusiones of three major biases: herding, overconfidence and regret aversion.[22]

Joseph also came up with four basic rules of the share market that are still of the greatest relevance today.[23]

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.

Confusion de Confusiones remained little known until the German economist Richard Ehrenberg published an influential essay in the 1892 Jahrbücher für Nationalökonomie und Statistik, “Die Amsterdame Aktienspekulation un 17. Jarhhundert.”[24] According to L. Petram the amount of attention he paid to tricks and schemes is out of proportion; there is too much drama and technical shortcomings to qualify it as a manual. He wrote Confusión for the entertainment of educated members of the Sephardic community (Academia de los Floridos).[25]

In his honour, the Federation of European Securities Exchanges [de] (FESE) awards since 2000 the annual De La Vega Prize to "young European researchers who distinguish themselves by outstanding research on the securities markets in Europe".[26]

Other works

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.[27]

Note

  1. ^ When Sara Pensa married in 1669 her father Isaac assisted her. The couple had the City Archives four more daughters who married in Amsterdam and used either their father's or mother's last name: Jochebet or Jocqueba Pensa (1655-1718) and Ribca Penso (1662-1720) who married on the same day in 1685, and Abigail Penso (ca 1663-1708) and Lea Pensa (1664-1710).[7]
  2. ^ In 1647 Moses Penso married Hester Pensa. They both came from Lisbon and lived on Vlooienburg. The couple was assisted by Raphael Penso and Abigail Pensa. They could have been Joseph' uncle, grandfather and aunts.[8]
  3. ^ In 1687 David, Raphael and Lea lived in the "Vinckebuurt" which is Rapenburgerstraat.[10] This is the street where Abraham Penso lived and perhaps Joseph also.

References

  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. ^ https://www.jewishvirtuallibrary.org/penso-de-la-vega-joseph
  5. ^ Confusion de Confusiones(1939)–Joseph de la Vega by G.J. Geers
  6. ^ https://www.dutchjewry.org/portuguese_israelite_cemetery/popup.htm?../P.I.G./image/01961201.jpg
  7. ^ https://www.dutchjewry.org/genealogy/vega/281.shtml; https://www.dutchjewry.org/portuguese_israelite_cemetery/p.shtml
  8. ^ Amsterdam City Archives
  9. ^ 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.
  10. ^ Biesen, F. van (2002) In het Bussenschuthofje, p. 3
  11. ^ The Financial Revolution in England: A Study in the Development of Public ... by P.G.M. Dickson
  12. ^ The Anglo-Dutch Moment: Essays on the Glorious Revolution and Its World Impact by Jonathan Irvine Israel, 451
  13. ^ https://www.dutchjewry.org/portuguese_israelite_cemetery/popup.htm?../P.I.G./image/01961801.jpg
  14. ^ 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
  15. ^ Confusion de Confusiones(1939)–Joseph de la Vega by G.J. Geers
  16. ^ 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
  17. ^ J.I. Israel. ‘The Amsterdam Stock Exchange and the English Revolution of 1688.’ In: Tijdschrift voor Geschiedenis 103 (1990): 412-440
  18. ^ A Concise Financial History of Europe Learning from the innovations of the early bankers, traders and fund managers by taking a historical journey through Europe’s main financial centers. Jan Sytze Mosselaar © 2018 Robeco, Rotterdam
  19. ^ The Anglo-Dutch Moment: Essays on the Glorious Revolution and Its World Impact by Jonathan Irvine Israel
  20. ^ Amsterdam as the cradle of modern futures and options (1550-1650), p. 15 by Oscar Gelderblom and Joost Jonker. Utrecht University, 2005
  21. ^ It is possible to read it in a full view mode here [1].
  22. ^ 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
  23. ^ Portions Descriptive of the Amsterdam Stock Exchange Selected and Translated by Professor Hermann Kellenbenz Hochschule fur Wirtschafts und Sozialwissenschaften
  24. ^ The First Book to Describe a Stock Exchange By Sotheby's
  25. ^ 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
  26. ^ Antoine Gattolliat (2011-06-16). "FESE - De la Vega Prize". Fese.be. Archived from the original on 2012-10-23. Retrieved 2012-10-18.
  27. ^ Detail from John A. Lane

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