Trader Talk

What Really Moves The Markets? It's All In The Hormones

My favorite story today: research from the University of Cambridge concludes that much of the daily movements of financial markets may be correlated with hormone levels, specifically of testosterone (aggressiveness) and cortisol (stress).

The researchers took saliva samples from 17 male traders on a trading floor in London over the course of eight days, tracking it against the amount of money they made or lost, and against the changes in the market. They concluded that traders who had elevated levels of testosterone when they came to work made more money, but only to a point; testosterone levels that were too high led to reckless decision making.

Cortisol levels--which measures stress but also can be an indication of cautiousness--were particularly elevated in times of market volatility.

"Maybe bubbles and crashes are coming from these steroids," one of the authors, John Coates, said in New Scientist. He went on to say that "maybe if more women and older men were trading, the markets would be more stable."

Questions?  Comments?