STA Blog

Published on the 10th April 2020 in the Financial Times newspaper, this wasn’t the first time Mr Coates had contributed an article. Acting on a hunch he had had when running a trading desk for Deutsche Bank, he then retrained in neuroscience and physiology at Cambridge University. He wanted to find out whether ‘the rollercoaster of physical sensations a person experiences while immersed in the markets alters their risk-taking’.

Research he and colleagues have done over the last 12 years attempted to see why financial and medical crises seemed to go hand in hand. But rather than focus on the effects of unemployment, straightened circumstances and worry, he focused on the effects of uncertainty itself. Tracking the traders in dealing rooms, he measured changes in cardiovascular, endocrine and immune systems – only to find that surprisingly their bodies were highly sensitive to market volatility.

He believes this is because our bodies are primarily designed to detect movement, our brains processing incoming data with the aim of working out what movement might ensue: i.e. what might be the best course of action. Here I would agree with him as I am acutely aware of sudden, unexpected movements, a mouse scurrying across the floor or a robin darting about on the lawn, and only later recognise what I’d seen.

What’s known as ‘’the stress response’’ is in fact preparation for movement, marshalling cortisol, glucose and free fatty acids to fuel our cells. Ideally short-lived, though in times of crisis it might carry on for for months, he found that levels mirrored bond price moves tick for tick – regardless of whether these were profitable or otherwise.

Hopefully you’ll be able to read the article in full via this link.

John Coates has written a book readers might also find interesting. ‘The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind’, published by Penguin Random House in 2012. The expression refers to the Jekyll-and-Hyde transformation traders go through when under pressure.