Tuesday, September 20, 2005

Psycho Trader

I am a real cynic when it comes to my profession. No, I am not defensive about it like, say, a Lawyer who hates jokes about Lawyers and sharks.

But this article made all too much sense to me. Its about a study that looked at how the most successful traders could be called, according to an experiment, "functional psychopaths".

In a study of investors' behavior 41 people with normal IQs were asked to play a simple investment game. Fifteen of the group had suffered lesions on the areas of the brain that affect emotions.

The result was those with brain damage outperformed those without.

The scientists found emotions led some of the group to avoid risks even when the potential benefits far outweighed the losses, a phenomenon known as myopic loss aversion.

So we are talking about brain-damaged people that have misfunctioning emotional centers of the brain.

"Emotions serve an adaptive role in speeding up the decision-making process," said Shiv.

"However, there are circumstances in which a naturally occurring emotional response must be inhibited, so that a deliberate and potentially wiser decision can be made."

Sure, you wouldn't be blamed for saying that this seems like a silly experiment, where's the data?, what was the control group like, how can these average people really expect to know what its like working with these jerks on a dealing room floor. [Ok that last one was my criticism]. Afterall, it was only an artile on Yahoo's most emailed.

But in real life, it makes perfect sense to me. The guys making these tremendous profits in the big dealing rooms of NY or London are rarely people you wish to hang out with. They are cheapskates, they are callous, they are cheats on their girls, they are cocky. They are, in shockingly numerous occasions, liars without remorse. I do admit that their are certainly honest, humble and noble, successful traders; and these are real diamonds in the rough mostly because they are even more impressive to have succeeded in a world of such bluster and arrogance.

But to categorize them as psychopaths explains a lot. The Dictionary.com short definition for "psychopath" is "A person with an antisocial personality disorder, manifested in aggressive, perverted, criminal, or amoral behavior without empathy or remorse."

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3 comments:

Anonymous said...

This is going to get me into a lot of trouble, but the same could be said for....women ( Bet u thought I was going to say Republicans). Regardless of the pervailing wisdom (that women are emotion driven)it explains why the fat or rude or ugly guy with all the money gets the girl. The girl sees the brass ring and just stuffs those emotions down, because the gain is so great.

(And, no, this has nothing to do with the fact that my ex left me for a guy that was, at the time, a better bet than me. OK, well, maybe a little.)

Larry

javaricho said...

Dan, why don't we hit easch other on the head and then become really succesful

javaricho said...

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