Prologue — the devil takes the hindmost: 3 000 years of speculation
Chapter 1 of 15 · 10 min
Edward Chancellor's Devil Take the Hindmost (1999) is the broadest cultural history of financial speculation there is: from Rome to the internet, written while the next bubble was swelling. The title is an old English proverb from games and obstacle races — the devil take the one who is last — and sums up the ethics of speculation: each for himself, against all, every generation anew. This chapter gives the course its map and reading glasses.
The book and its author first. Edward Chancellor is a British financial historian and journalist, and Devil Take the Hindmost appeared in 1999 — written while the internet bubble was already under way, which gives it a singular position: a history of bubbles completed at the edge of the next one. Chancellor tells not the economists' history but the culture's: he is as much at home in Roman letters, Dutch pamphlets and Japanese finance crime series as in price charts.
His material runs from the Roman societates publicanorum, through the tulip mania and the system-builders of the 1720s, to George Hudson's railways, Jay Gould's gold corner, 1929, zaitech Japan, the hedge funds of the 1990s and the internet mania. No other single volume covers so much evidence for the same mechanism.
What, then, is speculation? Chancellor begins in the etymology: the word comes from the Latin speculari — to spy out, observe, explore (the same root as mirror and spy). The speculator is one who acts on the observed future instead of the present now: buying not for the sake of cash flow but to sell on to someone who has observed more. Chancellor points to speculation's three preconditions — an organized market, money and credit, and an uncertain future — and notes that the world's oldest surviving stock exchange book, Joseph de la Vega's Confusión de Confusiones from 1688 about the Amsterdam stock exchange, already describes the full emotional register: hope, greed, fear and the age of regret.
The stock exchange is human nature with a listing.
The book's thesis is the course's backbone: the pattern of new innovation, credit surge, euphoria and crash repeats through every century, and the news never changes the feelings — only the scenery. Chancellor ends by noting that the history of speculation never ends; it begins again. The course reads him through AKM1's glasses: valuation multiple drift set loose from the fundamentals (V04 P/S, V05 P/B, V06 EV/EBITDA against V01 revenue growth, V07 gross margin, V08 EBITDA margin and V09 ROE), credit (V10 debt-to-equity ratio) and liquidity (V11) as fuel and ignition, narrative variables (V14 brand, V15 network effects, V16 product launches, V17 agreements and partnerships) as the language of euphoria, regulatory catalysts in both directions (V18), issue waves and capital consumption (V19) and share buybacks at the tops (V20) — and over it all: the margin of safety, the principle without a number.
A word of warning about how the course should be read: Chancellor does not condemn — he observes. The gallery of bubbles is full of talent, integrity and even real achievements; the railways were built, the internet was built. What recurs is not stupidity but structure: credit meets narrative, and prices come loose from what can be measured. A Swedish audience recognizes the mechanism from its own history — the property and banking crisis of 1990-94, the IT crash of 2000-02 — and that is precisely why the book is needed in a Swedish financial education: it shows that our bubbles were not Swedish exceptions but chapters in world literature.
Chapters 2-13 walk through the epochs, chapter 14 forces out the controversy parasite or necessary, chapter 15 gathers the pattern into the examination.