The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind

by John Coates

As testosterone levels rise, confidence and risk taking segue into overconfidence and reckless behavior. Could this upward surge of testosterone, cockiness and risky behavior also occur in the financial markets? This model seemed to describe perfectly how traders behaved as the bull market of the nineties morphed into the tech bubble. When traders, most of whom are young males, make money, their testosterone levels rise, increasing their confidence and appetite for risk, until the extended winning streak of a bull market causes them to become every bit as delusional, overconfident and risk-seeking as those animals venturing into the open, oblivious to all danger. The winner effect seemed to me a plausible explanation for the chemical hit traders receive, one that exaggerates a bull market and turns it into a bubble. The role of testosterone could also explain why women seemed relatively unaffected by the bubble, for they have about 10–20 percent of the testosterone levels of

In summary - when on a winning streak, take a break or get rekt