Traders are Functioning Psychopaths

Someone just sent me this article (little snips here, link to the article at the end) and I found it to be pretty straightforward.  Most people in the business know that emotions serve only to screw up returns (or better put, skew risk/return to the downside), but here at last we have academics telling us what we already know:  traders are emotionally stunted.  I greet this with open arms and a warm smile as it vindicates me on a number of fronts.


Enjoy!

CITY brokers have never enjoyed the best of reputations. The popular image is of a brash and boastful twentysomething with more money than sense or sensitivity.

But now a study by a group of eminent American academics suggests that star performers on the stock market may be even worse and could best be described as “functioning psychopaths”.

In a study of investors’ behaviour, the team from three US universities suggest that people with brain damage can make better financial decisions than the rest of us.

Market traders may feel slighted, but this study comes from the growing field of neuroeconomics, which investigates the mental processes that drive financial decision-making.

The experts found that emotions can make investors play it too safe. They claim the emotionally impaired are more willing to gamble for high stakes.

 Antoine Bechara, an associate Professor of Neurology at Iowa, suggested that successful investors in the stock market might plausibly be called “functional psychopaths”.

These are individuals either much better at controlling their emotions or, perhaps, not experiencing them with the same intensity as others.

 Traders