The first part is the title of a paper that Jason Zweig commends to our attention.
From the Wall Street Journal's Total Return blog:
Can You Trust Your Stockjobber?
How much has investing behavior evolved since earliest days of trading in the financial markets?From earlier this year, some deep insight into the activities of a knowledgeable investor in:
A fascinating new research paper analyzes how individual investors built stock portfolios soon after building portfolios first became possible: from 1690 to 1730.
The researchers, led by the distinguished financial historian Larry Neal of the University of Illinois, painstakingly replicated all the holdings and trades in the Bank of England, the East India Co. and the United East India Co., the Royal African Co., the Hudson’s Bay Co., the Million Bank and the South Sea Co. These were the dominant companies at the birth of the British capital markets three centuries ago. The share registries survive, so the scholars were able to match virtually every investment with the person who held it – encompassing 5,813 investors during the 1690s and 23,723 by the end of the period.
These people included everyone from dukes and other aristocrats to “stockjobbers,” or brokers, along with merchants, apothecaries, glassmakers, drapers and goldsmiths – and up to 27% of them were women.
Three centuries ago, investors:
Women appear to have had more-conservative portfolios than men....MORE
- underdiversified, with 86% of them owning shares in only a single stock;
- chased performance, with rising prices leading to higher trading volume;
- underperformed the market as a whole, earning lower returns and incurring higher risk.
Prop Trading the South Sea Bubble: Hoare's Bank 1720
I've mentioned the archives at Hoare's bank a few times, firstly, I believe, in "South Sea Bubble Survivor Says Dismantle RBS Along With Lloyds":
*From deep in the link-vault comes a tiny treasure, an analysis of Hoare's trading during the South Sea bubble (15 page PDF):
Riding the South Sea Bubble
By PETER TEMIN AND HANS-JOACHIM VOTHThis paper presents a case study of a well-informed investor in the South Sea bubble. We argue that Hoare’s Bank, a fledgling West End London bank, knew that a bubble was in progress and nonetheless invested in the stock: it was profitable to “ride the bubble.” Using a unique dataset on daily trades, we show that this sophisticated investor was not constrained by such institutional factors as restrictions on short sales or agency problems....MOREThe bank has opened their records to academics and Temin and Voth have taken full advantage.
Along with the above they published "Banking as an emerging technology: Hoare’s Bank, 1702–1742" in Financial History Review and "Private borrowing during the financialrevolution: Hoare’s Bank and its customers, 1702–24" in Economic History Review.
It's Riding the South Sea Bubble that really stands out though and is the 'tiny treasure'.
Yesterday, as I was putting "The World's First Stock Exchange (and first bear raid, first dividend, first equity derivatives...)" together I wanted to refer to RtSSB and did a quick search of the blog.
The link was broken.
The entire original purpose of this blog was to give me a database of things that caught my interest during the trading day. Hosted on Google's servers. Searchable by the Goog's algos (or anyone else).
And the damn link was broken. So I had to replace it....MORE