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

by John Coates

LISTENING TO OUR BODY And what an angelic choir they make. If only we could hear their music loudly and clearly, we would have at our disposal some of the most valuable signals in all the financial markets. For our bodies, and the preconscious parts of the brain, both cortical and subcortical, act as large and sensitive parabolic reflectors, registering a wealth of predictive information. They remain the most sensitive and sophisticated black boxes ever designed. When correlations between assets break down, when new correlations emerge, chances are our muscles, heart rate and blood pressure will register the changes before our conscious awareness. Just as galvanic skin conductance in the Iowa Gambling Task spikes before someone chooses cards from the losing decks, so too the bodies of experienced traders snap to attention well before they consciously understand the risks they are contemplating. Bodily signals, running ahead of consciousness, cry a warning. Yet traders often fail to heed them, because these messages are notoriously, frustratingly hard to hear. They fade in and out like a radio picking up a distant station, and leave us hanging on their every note, or worse, overinterpreting a burst of static. Our bodies and the preconscious regions of the brain may hear these songs clearly, and know what to do with the information they carry, but our conscious brain has only the most tenuous access to them. In fact our conscious brain has surprisingly little grasp of what m...