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Extraordinary Popular Delusions and the Madness of Crowds/Confusión de Confusiones
A unique and witty book consisting of selections from Extraordinary Popular Delusions and the Madness of Crowds and Confusion de Confusions. The combination of these two classics results in an accessible and fascinating assessment of crowd behavior, market movement and investment psychology.
224 pages, Hardcover
First published November 30, 1995
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Displaying 1 - 10 of 10 reviews
January 28, 2021
It is wise to enjoy that which is possible without hoping for the continuance of a favorable conjecture and the persistence of good luck."
- Joseph de la Vega, Confusión de Confusiones.
I work in finance and read a lot. Most people assume I read a bunch of business and finance books. Not really. Often, I think you learn more about leadership from history and more about people from poetry and fiction that you can ever find in a business or leadership book. But I've always wanted to read these two pieces. Bernard Baruch was a huge fan of Mackay's "Extraordinary Popular Delusions and the Madness of Crowds" and both books seemed too damn perfect for this Bitcoin, market volatility moment.
Without giving away the game, this book is actually two major pieces and a fantastic introduction:
1. Introduction to both works, with historical background, by Martin S. Fridson (probably one of the best known analysts in the high yield world). Fridson puts both books into historical and financial perspective and introduces both authors.
2. Extraordinary Popular Delusions and the Madness of Crowds (1841) by Charles Mackay is divided up into three case-studies:
i. The Mississippi Scheme/John Law (1716-1720): Dealing with France during the era between Louis XIV and Louis XV (Duke of Orleans as regent) and Law's involvement in both paper money AND the French enthusiasm for the Mississippi Scheme. It details the rise and fall of both Law and how this financial disaster almost destroyed France (one could argue that it was a big contributor to the French Revolution).
ii. The South Sea Bubble/Harley Earl of Oxford (1720): Deals with a similar bubble as the Mississippi Scheme, but was handled a bit differently and ended a bit neater. But again, Mackay details the same factors driving the stock prices up, and what eventually lead to the collapse of prices.
iii. Tulipomania : Holland's experience with the Tulip bubble (1636-1637). Primarily in the Netherlands, but also to a lesser degree in England. Mackay details the mania and its spread, as well as the implications (legal and social) after its collapse.
3. Confusión de confusiones(1688) by Joseph de la Vega is a book, written originally in Spanish by a Portuguese Jew, published in Amsterdam. Like Mackay, De la Vega is at heart a poet, so the book contains Biblical allusions, mythology, etc., but focuses on the Amsterdam stock exchange, and looks primarily at the trading of shares of the East and West India Companies. It is amazing (AMAZING) to think that within a decade of the Dutch East India company being created, markets had already developed that would not just buy and sell shares, but options, futures, calls, puts. The market in the 1600s in Holland doesn't feel too different than the NY Stock Exchange or NASDAQ of today.
It is hard to pick a favorite between these two. Both men had financial brains but the hearts of poets. I loved them. De la Vega sees more method in the madness of the markets, while MacKay sees the mass hysteria as the cause of crazy markets. Both men are probably correct to degrees. Both men are hugely influential in the way we think about the market, risk, speculation, and people. Just like I'd recommend poetry to financial analysts, but I'd recommend these financial books to poets. No one will be disappointed.
I should add a part here about Gamestop. The book now seems incomplete.
- Joseph de la Vega, Confusión de Confusiones.
I work in finance and read a lot. Most people assume I read a bunch of business and finance books. Not really. Often, I think you learn more about leadership from history and more about people from poetry and fiction that you can ever find in a business or leadership book. But I've always wanted to read these two pieces. Bernard Baruch was a huge fan of Mackay's "Extraordinary Popular Delusions and the Madness of Crowds" and both books seemed too damn perfect for this Bitcoin, market volatility moment.
Without giving away the game, this book is actually two major pieces and a fantastic introduction:
1. Introduction to both works, with historical background, by Martin S. Fridson (probably one of the best known analysts in the high yield world). Fridson puts both books into historical and financial perspective and introduces both authors.
2. Extraordinary Popular Delusions and the Madness of Crowds (1841) by Charles Mackay is divided up into three case-studies:
i. The Mississippi Scheme/John Law (1716-1720): Dealing with France during the era between Louis XIV and Louis XV (Duke of Orleans as regent) and Law's involvement in both paper money AND the French enthusiasm for the Mississippi Scheme. It details the rise and fall of both Law and how this financial disaster almost destroyed France (one could argue that it was a big contributor to the French Revolution).
ii. The South Sea Bubble/Harley Earl of Oxford (1720): Deals with a similar bubble as the Mississippi Scheme, but was handled a bit differently and ended a bit neater. But again, Mackay details the same factors driving the stock prices up, and what eventually lead to the collapse of prices.
iii. Tulipomania : Holland's experience with the Tulip bubble (1636-1637). Primarily in the Netherlands, but also to a lesser degree in England. Mackay details the mania and its spread, as well as the implications (legal and social) after its collapse.
3. Confusión de confusiones(1688) by Joseph de la Vega is a book, written originally in Spanish by a Portuguese Jew, published in Amsterdam. Like Mackay, De la Vega is at heart a poet, so the book contains Biblical allusions, mythology, etc., but focuses on the Amsterdam stock exchange, and looks primarily at the trading of shares of the East and West India Companies. It is amazing (AMAZING) to think that within a decade of the Dutch East India company being created, markets had already developed that would not just buy and sell shares, but options, futures, calls, puts. The market in the 1600s in Holland doesn't feel too different than the NY Stock Exchange or NASDAQ of today.
It is hard to pick a favorite between these two. Both men had financial brains but the hearts of poets. I loved them. De la Vega sees more method in the madness of the markets, while MacKay sees the mass hysteria as the cause of crazy markets. Both men are probably correct to degrees. Both men are hugely influential in the way we think about the market, risk, speculation, and people. Just like I'd recommend poetry to financial analysts, but I'd recommend these financial books to poets. No one will be disappointed.
I should add a part here about Gamestop. The book now seems incomplete.
May 2, 2010
Living in the twenty-four hour news cycle of today we all tend to be ever more ignorant of the past - we let the onrush of information slide on by as time and events are so much whitewater to navigate. Looking back, as through this nineteenth-century chronicle of historical mass hysterias, is to see the same patterns recurring continually throughout human history. Our current mortgage bubble is mirrored in many previous such respectable ponzi schemes. Our recent internet bubble is reflected in the story of the European tulip mania. Even our pop gurus find their counterparts in the mysterious Alchemists of old.
April 4, 2019
I ended up with a copy of this, instead of the "Extraordinary Popular Delusions and the Madness of Crowds" I wanted to read. So it's not really what I was looking for. I decided to finish this, and then put "Extraordinary Delusions" on my 'to read' list for later.
Martin S. Fridson takes the three case studies at the beginning of "Extraordinary Delusions" and reads them, and gives a long intro of, and then reads "Confusión de Confusiones".
This book shows how the behaviour of men remains largely the same now as it was then. The financial bubble has a long history. His telling of tulip mania was interesting, to that point.
While the historical examples were interesting to learn about, I found the writing of this book struggling to hold my attention and interest. It is very dry and verbose.
Martin S. Fridson takes the three case studies at the beginning of "Extraordinary Delusions" and reads them, and gives a long intro of, and then reads "Confusión de Confusiones".
This book shows how the behaviour of men remains largely the same now as it was then. The financial bubble has a long history. His telling of tulip mania was interesting, to that point.
While the historical examples were interesting to learn about, I found the writing of this book struggling to hold my attention and interest. It is very dry and verbose.
June 5, 2023
Enjoyable, floridly written, and carries many a fable that are relevant to all walks of life today (several hundred years later). However at times the (high) quality of the text often outshone or hid the message being delivered, and I think I learnt less than I'd expected. That may well be on me and there's probably more that could be gleaned on a second or third read.
That being said, you can see why many an investor and trader keep their copies as sacresanct.
That being said, you can see why many an investor and trader keep their copies as sacresanct.
October 13, 2023
Apparently this book is something of a classic among investors. I don't know about any of that, but MacKay's stories (published in 1841) and de La Vega's (1688) were a lot of fun. Aristocratic gambling addicts, bears, bulls, and butterflies, carriage accidents arranged by desperate ladies. A hunchback who rents himself out as a writing desk to frenzied speculators. Great research.
October 10, 2018
I enjoyed the "Popular Delusions and the Madness" part but did not like the Joseph De La Vega's part which is the second half of the book. Specially third dialog of that part.. That's why giving 3 stars.
April 8, 2021
4 for popular delusions and 3 for confusiones
January 19, 2025
Interesting to think these traits and trends have been around for so many years.
We truly do not learn from our mistakes and history does repeat itself.
We truly do not learn from our mistakes and history does repeat itself.
October 24, 2007
A great book about the history of how people (societies) create mass delusions. It was written hundreds of years ago, but lends itself to the thoughts of modern societies.
February 20, 2015
I really enjoyed reading this book. Amazing how things have not changed in 500 years.
Displaying 1 - 10 of 10 reviews