STREET DOGS: De la Vega
Prices changes without good reason are nothing new
In 1688, Joseph de la Vega, a successful Dutch merchant, wrote Confusion De Confusiones, one of the earliest known books on stock trading. In the book, Vega vividly describes excessive trading, overreaction, underreaction and the disposition effect. He also alludes to how rising prices alone create demand and continued price increases. He writes: "When a bull enters such a coffee house during the Exchange hours, he is asked the price of the shares by the people present. "He adds 1%-2% to the price of the day and he produces a notebook in which he pretends to put down orders. "The desire to buy shares increases; and this enhances also the apprehension that there may be a further rise." De la Vega reports on how bulls can continue buying and bears can continue selling when there is no reason or cause for them to do so, other than the price action itself: "The fall of prices need not have a limit, and there are also unlimited possibilities for the rise…. "Therefore the excessively high...
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