delanceyplace.com 9/18/12 - every speculator seems to have two bodies

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n today's excerpt - some things never change. The emotions and behavior of traders and investors in the earliest stock markets were no different than those of today:

"The first description of stock market activity in Western Europe is provided by Joseph Penso de la Vega in his Confusion de Confusiones, written in Spanish ... and published in Amsterdam in 1688. In a series of dialogues between a merchant and a shareholder, he describes the stock market as a madhouse, full of strange superstitions, peculiar practices, and compulsive attractions. Confusion provides a definitive picture of the specula­tive psychology.

"The 'game [of speculation] is an affair of fools,' whose partici­pants show a tendency to ritualistic playfulness:

'A member of the Exchange opens his hand and another takes it, and thus sells a number of shares at a fixed price, which is con­firmed by a second handshake. With a new handshake a further item is offered, and then follows a bid. The hands redden from the blows (I believe from the shame that even the most respected people do business in such an indecent manner as with blows). The handshakes are followed by shouting, the shouting by insults, the insults by impudence and more insults, shouting, pushes, and handshakes until the business is finished.'

"In the Compleat Gamester, first published in London in 1674 and attributed to the poet Charles Cotton, gambling is described as 'an enchanting witchery, gotten between idleness and vice; an itching disease, that makes some scratch the head, whilst others, as if bitten by a tarantula, are laughing themselves to death; or, lastly it is a paralytic distemper, which seizing the arm, the man cannot chuse but shake the elbow ... it renders a man incapable of prosecuting any serious action, and makes him always unsatisfied with his own condition; he is either lifted up to the top of mad joy with success, or plunged to the bottom of despair by misfortune; always in extremes, always in a storm . . . and, as he is transported as he wins, so losing, is tost upon billows of a high swelling passion, till he hath lost sight of both sense and reason.'

"The same mentality was found on the Amsterdam bourse. Vega describes the obsessive-compulsive behav­iour of a speculator invoking his luck; he 'wavers as to how best to secure a profit, chews his nails, pulls his fingers, closes his eyes, takes four paces and four times talks to himself, raises his hand to his cheek as if he has a toothache, puts on a thoughtful countenance, sticks out a finger, rubs his brow, and all this accompanied by a mysterious coughing as though he could force the hand of for­tune.' Some speculators are said to be of such a 'nervous condi­tion,' and their behaviour so restless and fixated, that 'even on their deathbed, their last worries are the shares.' Many exhibit signs of split personality. 'There are many occasions,' Vega observes, 'in which every speculator seems to have two bodies, so that astonished observers see a human being fighting himself.'

"Like later stock markets, the Amsterdam bourse in the seven­teenth century was dominated by a perpetual conflict between bulls and bears. Vega contrasted the liefhebbers ('lifters-up' or bulls), who were 'scared of nothing,' with the contremines ('underminers' or bears), who were 'completely ruled by fear, trepidation, and ner­vousness.' "