STOCK MARKET PHYSIOLOGY

The market, they say, can be irrational in the short term, but is rational in the long term.
In addition, a common reason for a swing in the fortunes of traders and companies on a given day, whether in a wide, walled street in New York or in a once-bombed-out but rebuilt stock exchange in the Marathis-only city of Mumbai, is a phenomenon called ‘sentiment‘.
Now, one might have wondered, why is ‘sentiment’ an issue in the cut-and-dried world of shares and commodities, where only the most hardened traders survive?
The answer is now here.

According the New Scientist:

Research from the University of Cambridge suggests that the movements of money in the financial markets are correlated to stock traders’ levels of two hormones: the steroids testosterone and cortisol.

…when the traders made more money, they had elevated levels of testosterone. When the markets were particularly variable, they had elevated levels of cortisol.

As the testosterone levels increased, so did the success of the traders. Till a point.

There is a point of diminishing returns; too much testosterone leads to too much aggression and reckless decision making.

So, now we know why the stock market behaves like a woman with PMS. And why horny men end up blowing a lot of money. In stocks and stockings.

10 responses to “STOCK MARKET PHYSIOLOGY

  1. May we therefore hypothesize that the trading profession must have a disproportionately higher percent of men and transmen?

  2. Let me guess you have lost money in the share market!
    //too much testosterone leads to too much aggression and reckless decision making//the average age of people investing in stock market is gradually decreasing.

  3. TRF,
    I dunno about the trans variety, but definitely about the male. The conclusion of the splendid research was that if the trade were inhabited more by women and older men, the market would become more stable, maybe….

  4. “Let me guess you have lost money in the share market!”
    Prerna:
    You clever girl!

  5. “So, now we know why the stock market behaves like a woman with PMS. And why horny men end up blowing a lot of money. In stocks and stockings.”.
    I’m going to quoting this! Enjoyed!

  6. Bill Clinton was good at Stock market whereas Bush has failed… hmmmmm This logic is right I guess :))

  7. Well, let me say USA’s first MBA president and he has destroyed our economy, with reverberations worldwide. After a correction, the markets should bounce back… esp. if we quit spending futilely on mideastern wars. 3 Trillion USD is last estimate I heard….not to include human suffering and casualties. Think about how that money could/will be spent otherwise!

  8. Brilliant post!
    had already got the gist on bbc business bulletin.

    i agree with narendra , that is a quotable quote 🙂
    No wonder , being a faithful husband u were bound to loose in the markets 😉
    but i object to ur Marathis-only city of Mumbai
    maybe Raj makes more noise but Calcutta treats outsiders much worse than Mumbai
    infact for all Bangladeshis , calcutta is a transit point for landing in behrampada – u should read suketu mehtas
    maximum city

  9. Hmmm… Maybe I should start playing the market by investing in lingerie companies — anything to boost my testosterone. What do you think, Doc?

  10. Paul:
    You could also invest in Pfizer, manufacturers of Viagra, or Ranbaxy, an Indian company listed at the NYSE, that manufactures a generic variant of the same!
    😉

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