The lead entry · Section 01 · The Certificate
What a certificate is
An engraved share certificate is a receipt for a claim: a stated fraction of a company, with a right to vote and a right to whatever is left after everybody else is paid. The engraving, the seal and the counterfoil are all anti-forgery engineering, and the document itself has now almost entirely disappeared into a register entry.
Read the entryEvery entry defines the thing flatly before it says anything about it. Mechanism and record only — never a suggestion anybody could act on.
A selection, not the whole register
Eight of 28 entries · the full registerBid and ask
Two queues facing each other. The gap between the best of each is the spread, and it is the cost of immediacy.
Tulips, as recorded
What the contemporary records actually show about the Dutch bulb trade, which is narrower and stranger than the popular account.
Six more, in brief
Why settlement takes days
Between agreeing a trade and exchanging cash for title there is netting, confirmation and delivery. The delay is administrative history, not physics.
Weighting
By price, by size, or equally — three indices of the same market that disagree.
Every trade had an address
Open-outcry floors were organised spatially: a pit for each instrument, and position in it mattered.
The empty side
What happens when nobody is willing to take the other end.
An average is not an outcome
In a skewed distribution most results sit below the mean, so the average describes almost nobody.
Multiply, do not add
Growth compounds as a product of factors, not a sum of percentages, which is why intuition about it is reliably wrong.
Sections 06 & 07 · Compounding, Average & Median
Down a half, then up a half, leaves you down a quarter
- 01Multiply, do not addGrowth compounds as a product of factors, not a sum of percentages, which is why intuition about it is reliably wrong.
- 02The mean of factorsThe average that describes compound growth is geometric, and it is always lower than the arithmetic one.
A fall needs a bigger riseThe mean of factorsMultiply, do not add
| Operation | Factor | Running |
|---|---|---|
| Start | — | 100.00 |
| Multiply | × 0.50 | 50.00 |
| Multiply | × 1.50 | 75.00 |
| Mean of the two factors | 1.00 | 75.00 |
The two factors average to one. The number does not come back. Returning to 100 from 50 requires a factor of two.
| A fall of | Needs a rise of | Factor |
|---|---|---|
| 10 per cent | 11.1% | × 1.111 |
| 25 per cent | 33.3% | × 1.333 |
| 50 per cent | 100% | × 2.000 |
| 75 per cent | 300% | × 4.000 |
| 90 per cent | 900% | × 10.000 |
Each right-hand figure is the reciprocal of what is left. The two columns are the same statement written twice.
Eight sections
Every entry is reachable from here or from the registerThe Certificate
What the instrument legally is.
4 entries02The Book
Bid, ask, depth and the empty side.
4 entries03The Room
Where trading physically happened.
3 entries04Clearing & Settlement
Why it takes days.
4 entries05The Index
Choices buried in the weighting.
3 entries06Compounding
Arithmetic that defeats intuition.
3 entries07Average & Median
Two different animals.
3 entries08Manias
Recorded events, not lessons.
4 entries