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New Study – Traders are worse than Psychopaths
The University in St. Gallen, Switzerland (how appropriate) has come out with a study that compares traders with psychopaths. The surprising result was that not only do traders act like psychos, they’re worse. I’m not surprised at this at all. From NZZ:
The study reviewed the direct comparison of results with an existing study of 24 psychopaths in German high-security hospitals and a control group of 27 "normal" people.
The “normal people” that is referred to are 27 traders. Stock guys, FX/commodities traders and derivative types were the “normal' people that were stacked up against the actual crazies in the German nut house.
Even the experts were surprised by the result. They attest to the stock market professionals with a penchant for immense destruction.
The performance of the 27 dealers is even worse than the psychopaths.
"It's like beating one of the neighbor’s expensive cars with a baseball bat with the sole objective of owning the most beautiful car in the neighborhood."
Now that we “know” (what was has been suspected all along) that traders are nuts it’s worth looking at what a textbook definition of a psycho actually is.
1. Considerable superficial charm, verbal facility and average or above average intelligence.
2. Unreliability, disregard for obligations, no sense of responsibility.
3. Untruthfulness and insincerity.
4. Inexplicable impulsiveness.
5. Antisocial behavior.
6. Poor judgment and failure to learn from experience.
7. Total self-centeredness.
8. General poverty of deep and lasting emotions.
9. Lack of any true insight, inability to see oneself as others do.
10. Fantastic and objectionable behavior, after drinking and sometimes even when not drinking--vulgarity, rudeness, quick mood shifts, pranks.
11. An impersonal, trivial, and poorly integrated sex life.
.
There was a point in my life where I thought of myself as a successful trader. A “Master of the Universe”; a “Big swinging dick”. That was 20 years ago. Looking at the above list makes me cringe. To one degree or another all the descriptions fit parts of my life at the time.
I’m “All better” now…….
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I think you are on the right track but you have the wrong profile. "Cool kids" don't become the pillars, they burn out and spend their days "talkin about the old times" (Springsteen). It's the "ass kissing, trend jumping, do and say all the right things kids" that inherit the earth.
And it takes all of these qualities to say to one's self, "I'm fit to govern the rest of you."
Which is why I have advocated (albeit not perfectly seriously) that our politicians should be chosen like juries (and paid similarly)... randomly from the populace... subject to a few peremptory challenges and/or american idol style knockout voting on a tv/national scale (following public debate/inquisition).
Combine this with the complete and total removal of campaign contributions... and you've got a recipe for change... who knows the consequences, but you'll get some change I bet. (as opposed to electing someone who claims that he or she will "change" things).
My vote goes for the guy that clearly doesn't want to participate and can't believe he had to get picked for this shit. He'll do swell.
This is precisely how the Greeks ran their democracy. There were no elections, there was a random lotery to fill public positions.
MachoMan:
Yep, or like Bill Buckley said:
"I'd rather entrust the government of the United States to the first 400 people listed in the Boston telephone directory than to the faculty of Harvard University."
William F. Buckley, Jr.
That's a very interesting quotation. It would be very good to try a voting process that didn't involve a money spending advertising competition, also. Campaign financiing seems to be the root of the problem.
what is their view on High Frequency Trading?
Software developers= psycho?
I trade and code - the psychoses "balance" each other out (at least partially, I hope)
Those are the highly-analytical, yet wholly disassociated types, who can create nuclear bombs while never contemplating their own culpability about the fact that they are used by the military to kill thousands (and potentially millions). To them, it is about knowledge, and advancing the state-of-the-art. They may even oppose war in general, yet still undertake the task.
If pressed, they will use moral relativism (but... but, cheap energy!) as an answer to deflect any point leveled at their participation. So in the end, they believe themselves responsible for the good outcomes, while not responsible for the bad, all from the same action.
Thanks Bruce..... do you have the original report or even the researchers names? I got nothing on G scholar, Speigel, and the U st g sites....Cui Bono!
edit Pascal Scherrer, and Thomas Noll
http://www.spiegel.de/international/zeitgeist/0,1518,788462,00.html
http://mobile.nzz.ch/wirtschaft/aktuell/destruktive_dynamik_im_handelsra...
thanks.. I just found that and was working on her dissertation now... for: Roland Pfyl got it....
http://www1.unisg.ch/www/edis.nsf/SysLkpByIdentifier/3646/$FILE/dis3646.pdf
2nd edit.... This is getting frustrating- Thomas Noll's prison updated the publication list on the 21st and this is not there. Pascal Scherrer only comes up as some Australian tourism guy...or an alpine herb researcher.....
Can anyone find the actual research published by Thomas Noll and Pascal Scherrer??
Bruce, I would say that the 'psycho-trader' correlation listed above probably apply mainly to people who trade other people's money while working for big financial companies.
As far as your average-trading-for-yourself person is concerned, it is completely the opposite: most of the 'traders' that i've been in touch with over the years are as far away from this stereotype as possible...
I wouldn't take this 'research' too seriously without drilling down a lot deeper into what methods were used to come to these conclusions, whether they made serious efforts to compensate for selection bias, etc, etc. The mere fact they decided it was worth comparing traders with psychopaths suggests they'd probably go out of their way to find resembalnces. Furthermore - researchers are almost inevitably life-long academics, who in my experience not only have no understanding of markets, but despise them.
When I covered the subject at University, it rapidly became clear that at least 95% of research - even in such sciences as 'medicine' - is seriously flawed. It's very, VERY hard (and expensive) to do good research.
Survival of the fittest, bitchez.
The only option to existence is non-existence, which will occur if you don't employ many of the aforementioned traits in the current environment.
I guess # 11 is why prostitution is the oldest and most prosperous profession. That poorly integrated sex life is some tough shit for the boyz to shake !
Actually it´s the second oldest profession. Medicine man is even older. However these profession have in common that you often get unintended consequences as part of the bargain.
wow, that was kind of spot on for me.
Doesn't make them bad investors...just wouldn't want to be married to one...
too unpredictable in the sack..?
no, the problem is they'd charge you whether you're satisfied or not
I traded for twenty years. Now I teach at business schools. Part of what I teach includes elements from the list. I don't think the B-school administration has bothered to check exactly what I teach since no one has complained. Or perhaps they wholeheartedly agree.
Wonder how HFT's are impacting your profession?
High Frequency Teachers?
I guarantee, if you put that list side by side with CEOs, CFOs, and pretty much anyone associated with Gold Mansacks, you'll get the same exact result.
"Gold Mansacks"
Brilliant...a keeper
I'd include lawyers but that would be unfair to the other groups
Now I understand the run of the mill type on ZH...lol, its one hellava synopsis by a study group. Kudos to BK, an avowed trader, for presenting it to us all; some of whom never trade on day basis even if we invest.
It's Step One of the "Trader" Recovery Program.
It's Step Nine, "making amends," that nobody will get past.
http://www.12step.org/the-12-steps/step-9.html
It triggers relapse every time--and their relapse is everybody else's Austerity.
"and their relapse is everybody else's Austerity. "
Priceless..
ORI
What a shock.
I know--let's start calling the psychopaths "investors."
Isn't this refferred to on the Street as "ripping someone's face off?"
On the Street when one has absolutely bled the "counter-party" dry, nothing wnatsoever left for them to give, drowning deep remorse, even contemplating suicide, when one returns to take the last breath of their life it called a "skullfucking".
Go figure.
From years of intense personal experience, I am not all certain that the denzins of Wall Street, Bay, Lombard, et.al, are merely psychos, for some on the IB side are distinct sociopaths by their very nature of finess and salesmanship.
Great personal attribute sets when properly placed within a Governmentally Chartered Pillage and Rape Machine.
I've always wondered about a more common phrase: "short squeeze". it's pretty clear to all following at this point that there is shit coming, and it's going to be ugly. Yet, we keep getting these squeezes over and over and over and over and over again (today again)... This typology explains this really nicely. It's more important to screw the shorts than it is to be positioned cautiously ahead of the storm. Thank you for this, Bruce!
The very same. "Winning" is not just the bottom line. It's also beating the other guys to death.
Well, yeah but unlike the more general macro-economic picture where "a rising tide lifts all boats" trading (and pretty much all alpha in this sense) is a zero-sum game. That's just the nature of this beast: for every winner is a loser on the other side. Wanting the other guy to lose or or lose big is the same thing as hoping or trying like hell to win.
Not really Merc, it's more accurate to say that for every winner there is AT LEAST ONE loser.
And that has far more destructive consequences over time.
Can you outrun the bear?
don't have to ;-)
All you have to do is outrun the other guy.
Well, now I can gladly say that I was never cut out for trading. Perhaps the psychosis helps keep the constant buyer's remorse at bay? Anytime I tried, my stomach turned with every tick.
This dude is apropos:
http://www.youtube.com/watch?v=B3ddIJajQ0w
LMAO.
Along similar lines of thought..
http://www.youtube.com/watch?v=SibF7GIOiSU
socialists and jihads are psychopaths.
-the evil businessman
http://expose2.wordpress.com