A successful Wall Street trader turned Cambridge neuroscientist reveals the biology of boom and bust and how risk taking transforms our body chemistry, driving us to extremes of euphoria and risky behavior or stress and depression
The laws of financial boom and bust, it turns out, have more than a little to do with male hormones. In a series of groundbreaking experiments, Dr. John Coates identified a feedback loop between testosterone and success that dramatically lowers the fear of risk in men, especially younger men—significantly, the fear of risk is not reduced in women. Similarly, intense failure leads to a rise in levels of cortisol, the antitestosterone hormone that lowers the appetite for risk across an entire spectrum of decisions.
Coates had set out to prove what was already a strong intuition from his previous life: Before he became a world-class neuroscientist, Coates ran a derivatives desk in New York. As a successful trader on Wall Street, "the hour between dog and wolf" was the moment traders transformed-they would become revved up, exuberant risk takers, when flying high, or tentative, risk-averse creatures, when cowering from their losses. Coates understood instinctively that these dispositions were driven by body chemistry—and then he proved it.
The Hour Between Dog and Wolf expands on Coates's own research to offer lessons from the entire exploding new field—the biology of risk. He brings his research to life by telling a story of fictional traders who get caught up in a bubble and then a crash. As these traders place their bets and live with the results, Coates looks inside bodies to describe the physiology driving them into irrational exuberance and then pessimism. Risk concentrates the mind—and the body—like nothing else, altering our physiology in ways that have profound and lasting effects. What's more, biology shifts investors' risk preferences across the business cycle and can precipitate great change in the marketplace.
Though Coates's research concentrates on traders, his conclusions shed light on all types of high-pressure decision making-from the sports field to the battlefield. The Hour Between Dog and Wolf leaves us with a powerful recognition: To handle risk in a "highly evolved" way isn't a matter of mind over body; it's a matter of mind and body working together. We all have it in us to be transformed from dog into wolf; the only question is whether we can understand the causes and the consequences.
The Hour Between Dog and Wolf
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Book Description
Frequently Bought Together
Editorial Reviews
Review
One of Financial Times' Best Books of 2012
"A profoundly unconventional book... It's also so absorbing that I wound up reading it twice... From the first page to the last, Coates challenges deep-seated assumptions."
—Bloomberg Businessweek
"If anyone is qualified to unify the seemingly disparate subjects of financial markets and neurology, it's John Coates... The Hour Between Dog and Wolf is a powerful distillation of his work—and an important step in the ongoing struggle to free economics from rational-actor theory."
—The Daily Beast
"[I]t makes intuitive sense that biological responses inform the mood of the markets. This book puts flesh on that idea."
—The Economist
"[A] scintillating treatise on the neurobiology of the business cycle. Coates... draws an intimate portrait of life on a trading floor…The result is a provocative and entertaining take on the irrational exuberance—and anxiety—of the modern economy."
—Publishers Weekly
"A provocative challenger to rational choice views of high finance, Coates makes an exceptionally clear, readable presentation that is bound to influence arguments about the regulation of Wall Street.”
—Booklist
"The picture of humans as rational economic machines has gone down the tubes. This book looks at the biology of why Homo economicus is a myth, and no one is better positioned to write this than Coates—he is a neuroscientist AND an economist AND an ex-Wall Street trader AND a spectacular writer. A superb book."
—Robert Sapolsky, neuroscientist, Stanford University
"A profoundly unconventional book... It's also so absorbing that I wound up reading it twice... From the first page to the last, Coates challenges deep-seated assumptions."
—Bloomberg Businessweek
"If anyone is qualified to unify the seemingly disparate subjects of financial markets and neurology, it's John Coates... The Hour Between Dog and Wolf is a powerful distillation of his work—and an important step in the ongoing struggle to free economics from rational-actor theory."
—The Daily Beast
"[I]t makes intuitive sense that biological responses inform the mood of the markets. This book puts flesh on that idea."
—The Economist
"[A] scintillating treatise on the neurobiology of the business cycle. Coates... draws an intimate portrait of life on a trading floor…The result is a provocative and entertaining take on the irrational exuberance—and anxiety—of the modern economy."
—Publishers Weekly
"A provocative challenger to rational choice views of high finance, Coates makes an exceptionally clear, readable presentation that is bound to influence arguments about the regulation of Wall Street.”
—Booklist
"The picture of humans as rational economic machines has gone down the tubes. This book looks at the biology of why Homo economicus is a myth, and no one is better positioned to write this than Coates—he is a neuroscientist AND an economist AND an ex-Wall Street trader AND a spectacular writer. A superb book."
—Robert Sapolsky, neuroscientist, Stanford University
About the Author
John Coates is a senior research fellow in neuroscience and finance at the University of Cambridge. After completing his Ph.D., Coates worked for Goldman Sachs, Merrill Lynch, and Deutsche Bank in New York, where he observed the powerful emotions driving traders. He returned to Cambridge in 2004 to research the effects of the endocrine system on financial risk taking. Coates’s work has been cited in several publications, including The New York Times, Wired, and The Economist, and he has appeared on Good Morning America, CBS Evening News, and the BBC. His writing has been published in The Financial Times and Proceedings of the National Academy of Sciences, among others.
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Customer Reviews
Most Helpful Customer Reviews
33 of 36 people found the following review helpful
By Boon L. Kwan
Format:Hardcover
This is another of those serendipitous finds, while browsing in the bookstore, that was very readable and instructive. Both because I work in finance (ex-investment banker) and from a martial arts / sports / health perspective there is a lot of material here that expanded my thinking.
The subtitle for the book is called "Risk Taking, Gut Feelings and the Biology of Boom and Bust" and it is by the neuro-scientist and former Wall Street Trader John Coates. In order to piggy back on the seemingly insatiable demand for books on the credit crisis of 2008, most reviews and editorials in major magazines have focused upon the risk taking side of the book and how pressures of trading can change the biological composition of your body, impacting your appetite for risk (success builds a feeling of overconfidence and a greater appetite for risk) thus having the potential to cause booms and busts in stock markets and the broader economy. A substantial part (but not overwhelming) of the book is about finance and trading and author uses a trio of fictional fixed income (bond) traders during the 2008 crisis to illustrate his points, and this keeps the text from becoming too academic or dry.
But what also interested me was the more general topic on how humans are not disembodied brains who make rational decisions, but that our thinking is very much impacted by our body and our senses. There is a lot of analysis here on how the brain regions processing our reasoning skills are intricately tangled up with our motor circuits and are intimately linked to movement. There is also a whole level of activity where there is a feedback loop between our hormones and our thinking, and a lot of this is on a pre-conscious level. Reading the book helps explain gut instincts, and how during the most powerful moments of your life - satisfying moments of flow, of insight, of love and traumatic moments of fear anger and stress- you lose any feeling of the split between mind and body and the two merge as one.
From the perspective of someone who is interested in alternative health and martial arts, there is information here on how humans differ from other animals in that they can learn complex movements which are not instinctual, such as dance, music and martial arts and how these movements are stored in different parts of the brain as we train then to an instinctual level. On how the best traders, who have the quickest perceptions and best "gut feeling" usually are physically quite well developed as the two are intimately linked, with many ex-olympians and jocks on the trading floor. On how winning can influence our testosterone levels and higher testosterone levels prime our bodies to keep winning and this matters in sports (and by extension in one-on-one combat) as well as on the trading floor. On how we can train and improve our sensitivity to what is going on internally in our bodies, to better understand what is going in terms of our stress levels and how it affects our thinking. And also many health tips on managing stress (including the importance of cold water baths and showers), and how small amounts of stress and challenge are actually good for us and our health.
The title of the book comes from the following:
[The hour] between dog and wolf, that is, dusk, when the two cannot be distinguished from each other, suggests a lot of other things besides the time of day ... the hour in which ... every being becomes his own shadow, and thus something other than himself. The hour of metamorphoses, when the people half hope, half fear that a dog will become a wolf. The hour that comes to us from at least as far back as the Middle Ages, when country people believed that the transformation might happen at any moment.
- Jean Genet Prisoner of Love
In summary there is a lot in this book beyond the title and would recommend it to anyone with an interest in science, especially the functioning of the brain and the mind, as well as exercise and health.
The subtitle for the book is called "Risk Taking, Gut Feelings and the Biology of Boom and Bust" and it is by the neuro-scientist and former Wall Street Trader John Coates. In order to piggy back on the seemingly insatiable demand for books on the credit crisis of 2008, most reviews and editorials in major magazines have focused upon the risk taking side of the book and how pressures of trading can change the biological composition of your body, impacting your appetite for risk (success builds a feeling of overconfidence and a greater appetite for risk) thus having the potential to cause booms and busts in stock markets and the broader economy. A substantial part (but not overwhelming) of the book is about finance and trading and author uses a trio of fictional fixed income (bond) traders during the 2008 crisis to illustrate his points, and this keeps the text from becoming too academic or dry.
But what also interested me was the more general topic on how humans are not disembodied brains who make rational decisions, but that our thinking is very much impacted by our body and our senses. There is a lot of analysis here on how the brain regions processing our reasoning skills are intricately tangled up with our motor circuits and are intimately linked to movement. There is also a whole level of activity where there is a feedback loop between our hormones and our thinking, and a lot of this is on a pre-conscious level. Reading the book helps explain gut instincts, and how during the most powerful moments of your life - satisfying moments of flow, of insight, of love and traumatic moments of fear anger and stress- you lose any feeling of the split between mind and body and the two merge as one.
From the perspective of someone who is interested in alternative health and martial arts, there is information here on how humans differ from other animals in that they can learn complex movements which are not instinctual, such as dance, music and martial arts and how these movements are stored in different parts of the brain as we train then to an instinctual level. On how the best traders, who have the quickest perceptions and best "gut feeling" usually are physically quite well developed as the two are intimately linked, with many ex-olympians and jocks on the trading floor. On how winning can influence our testosterone levels and higher testosterone levels prime our bodies to keep winning and this matters in sports (and by extension in one-on-one combat) as well as on the trading floor. On how we can train and improve our sensitivity to what is going on internally in our bodies, to better understand what is going in terms of our stress levels and how it affects our thinking. And also many health tips on managing stress (including the importance of cold water baths and showers), and how small amounts of stress and challenge are actually good for us and our health.
The title of the book comes from the following:
[The hour] between dog and wolf, that is, dusk, when the two cannot be distinguished from each other, suggests a lot of other things besides the time of day ... the hour in which ... every being becomes his own shadow, and thus something other than himself. The hour of metamorphoses, when the people half hope, half fear that a dog will become a wolf. The hour that comes to us from at least as far back as the Middle Ages, when country people believed that the transformation might happen at any moment.
- Jean Genet Prisoner of Love
In summary there is a lot in this book beyond the title and would recommend it to anyone with an interest in science, especially the functioning of the brain and the mind, as well as exercise and health.
15 of 17 people found the following review helpful
Format:Hardcover
This book is basically about how emotional feedback loops trigger change in body chemistry and through that our behavior. The author argues that our brains and bodies are much more integrated than most people believe and that modern neuroscience proves it. You will find in this book a story told through the context of financial trading booms and busts how these feedback loops work. There is a lot of science in this book and it is well argued and convincingly presented.
The Hour Between Dog and Wolf is quite fascinating. We have this idea that our behavior is driven solely or mostly by our choices, choices that we consciously make. Research in the last few decades is making this harder and harder to accept. This book does an excellent job at showing how our behavior is much more complicated and that our body chemistry plays a big part in influencing our brain and our behavior.
I really liked this book and found it fascinating. Its ideas apply to much more than the trading context in which it is set. If you are interested in science, human behavior, or the brain I can easily recommend it.
The Hour Between Dog and Wolf is quite fascinating. We have this idea that our behavior is driven solely or mostly by our choices, choices that we consciously make. Research in the last few decades is making this harder and harder to accept. This book does an excellent job at showing how our behavior is much more complicated and that our body chemistry plays a big part in influencing our brain and our behavior.
I really liked this book and found it fascinating. Its ideas apply to much more than the trading context in which it is set. If you are interested in science, human behavior, or the brain I can easily recommend it.
10 of 12 people found the following review helpful
By John Maltby
Format:Hardcover|Amazon Verified Purchase
As a trader of many years the book brought back lots of memories; - the good ones of being "at the still point of the turning world" calm, in a zone, while all around was a frenzy, and you could think at savant speed, effortlessly "seeing" answers in a way that had no conscious cognitive effort. The harder times when your body is in a knot and your mind won't work at all. This book captures both extremes and should be required reading for traders, managers and anyone interested in why markets behave as they do and how we might address the human failings that drive the behavior.
Most Recent Customer Reviews
5.0 out of 5 stars
Excellent
Explains so much about how and why we feel what we do. And how to embrace it, manage it and change it.
Published 13 days ago by Edstrover
5.0 out of 5 stars
A must-read book to understand actual decision-making in the real...
This author is a former trader turned neuro-scientist and he explains how stress and hormones drive the behavior of traders, leading to irrational exuberance and well as irrational... Read more
Published 1 month ago by AVEROUS Jirimie
4.0 out of 5 stars
It's a hormone thing!
Validates what you always knew to be true (trust your body) and certainly is thought-provoking. Generated great discussion at book club.
Published 1 month ago by Sandra C. Hofmann
1.0 out of 5 stars
Populist drivel passing for serious research
The author has tried to marry populism with pseudo science to come up with forgetable book, which I was unfortunate enough to buy. Read more
Published 2 months ago by manualal
5.0 out of 5 stars
Don't let anyone see the title or they'll want to borrow this book...
There are plenty of people who are aware that many of our bankers have now morphed into banksters. These sub or super beings (depending on your standpoint) are clearly well... Read more
Published 2 months ago by John Turner
4.0 out of 5 stars
more neuroscience than behavioral economics
Contrary to most other books that grab your attention early and lose it late, this book starts off rather slow but finishes strong as it speaks to resilience and how market... Read more
Published 3 months ago by RockyTopTrader
4.0 out of 5 stars
Expected A Trading Book But Got A Biology Book!
I did not do extensive research before I decided to buy the audio book, Plus NN Taleb's endorsement was good enough for me. Read more
Published 4 months ago by Jay Balapa
4.0 out of 5 stars
Fascinating
In this Wellcome Trust shortlisted book, Coates describes his research into the feedback loop between testosterone and success in the financial market. Read more
Published 4 months ago by Rachel
5.0 out of 5 stars
Yes, I loved it.
You need to like both the markets and physiology. This was a masterful description of what a trader does and what a trader is. Read more
Published 4 months ago by northernsnowbird
1.0 out of 5 stars
Important topic, but an unimportant book
Be aware that a big portion of the glowing five-star reviews are likely to be fake.
The biology of risk-taking is a fascinating new topic. Read more
The biology of risk-taking is a fascinating new topic. Read more
Published 4 months ago by Jackal
