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The Hour Between Dog and Wolf
How Risk-Taking Transforms Us, Body and Mind
The Hour Between Dog and Wolf is an illuminating look at the influence of human physiology on the thinking and behavior of stock market traders. The author, inspired by his experiences on the trading floor, investigates the hormonal basis of financial decision making, and demonstrates the way in which the body’s mechanisms can destabilize our financial markets. The book also explains what can be done to reduce the detrimental effects of our biology on the market, and even how we can use this knowledge to our financial advantage.
- Anyone who is curious about the relationship between biology and stock trading
- Anyone who is interested in how people think with their bodies
- Anyone wondering how bubbles can form in the stock market
John Coates is a neuroscientist working at the University of Cambridge, and a former Wall Street trader (for Goldman Sachs, Merrill Lynch and Deutsche Bank). In 2012, he made The Financial Times and Goldman Sachs Business Book of the Year Award shortlist, and was named on the magazine Foreign Policy’s list of Top 100 Global Thinkers.
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The Hour Between Dog and Wolf
How Risk-Taking Transforms Us, Body and Mind
- Read in 18 minutes
- Audio & text available
- Contains 11 key ideas
Synopsis
The Hour Between Dog and Wolf is an illuminating look at the influence of human physiology on the thinking and behavior of stock market traders. The author, inspired by his experiences on the trading floor, investigates the hormonal basis of financial decision making, and demonstrates the way in which the body’s mechanisms can destabilize our financial markets. The book also explains what can be done to reduce the detrimental effects of our biology on the market, and even how we can use this knowledge to our financial advantage.
Key idea 1 of 11
You think with your whole body, not just your brain.
When you think about the connection between your brain and your body, how do you picture it? Do you imagine your brain as somehow separate from the rest of your body – a kind of control center that resides in your head, steering the body and causing its every action?
If so, then you’re in for a surprise: thinking involves the whole body, not just the brain.
For instance, our thoughts and actions are influenced by hormones that stem from different regions of the body.
Take Ghrelin, a hormone secreted by cells lining the stomach whenever it’s empty. Release of the hormone causes the brain to register hunger, prompting you to raid the refrigerator for something to eat.
But you’re not a slave to Ghrelin. If you have strong reasons for not eating – e.g., a religious fast, hunger strike or a diet – you can effectively ignore Ghrelin’s signals. But this is true only up to a point: over time, the hormone acts somewhat like a lobby group, its signals becoming louder and harder to ignore.
As this shows, certain body regions influence the processes in your brain – in this case, registering hunger. And this can be further demonstrated by looking at the way that the gut interacts with the brain.
Whenever we’re stressed, the brain will inform the gut that the body is facing an imminent threat, and must therefore prepare for it. Upon “learning” this, the gut will halt the digestion process, in order to save energy for either fight or flight. Stress, in other words, is processed by both body and brain.
It works the other way around too: an overly sensitive gut can influence our thinking. In fact, sufferers of Crohn’s disease, a type of inflammatory bowel disease, are more sensitive to emotional stimuli. So, if sufferers are exposed to emotive images – such as a distressed child – they’re more likely to become emotionally aroused than healthy people are.
Key ideas in this title
- You think with your whole body, not just your brain.
- Testosterone has a massive influence on our behavior, especially by inclining us to take risks.
- Since our physiology is slow and automatic, our brain anticipates movements and our consciousness acts like a bystander.
- Traders learn to predict the markets through their automatic physical reactions.
- The stock market demands a lot from traders, so they need to have cognitive skills and physical fitness.
- When stock prices rise, traders can become addicted and prone to excessive risk taking.
- During a market crash, traders experience a strong physical reaction, which makes it even harder for them to recover from it.
- Toughening up traders and reducing their stress can help them make fewer bad decisions.
- Mixing up the staff of the stock exchange can minimize the effects of testosterone on the market.
- Novelty can add to our stress, while a feeling of control can reduce it.
- Final summary