The Hour Between Dog and Wolf: Risk-Taking, Gut Feelings and the Biology of Boom and Bust [Paperback]

Superb, lots of ideas about how hormones play a dominant role in our lives using the markets as a case study. It has really made me think about how the recession may have not only dampened my own risk taking instincts but also affected my physical health. His suggestions for toughening our systems to cope with episodes of extreme stress also make a lot of sense and correspond with my own anecdotal experience that lifting heavy weights in the gym seems to be the only thing that I have discovered that keeps my stress levels under control.

Like war, activity on the trading floor "consists of long stretches of boredom punctuated by brief periods of terror", writes John Coates in The Hour Between Dog and Wolf (Fourth Estate, £20).
What follows is a minute-by-minute analysis of the trader's metabolism which reveals the effects of the euphoria, the stress, the boredom and the heart-stopping moments of hyperactivity where "nature and nurture conspire to produce an awful train wreck, leaving behind mangled careers, damaged bodies and a devastated financial system".
Coates was a financial services worker on Wall Street in the 1990s and watched the bull market go wild, noting "how its energy and excitement overflowed the stock exchange, permeated the culture and intoxicated people". Traders "on an extended winning streak experience a high that is powerfully narcotic". This high, he notes, is an "irrational exuberance" which is very close to Keynes' "animal spirits", thereby providing the first bingo moment of The Hour. He wonders if this irrational exuberance "might be driven by a chemical". He calls the chemical the Bull-Market Molecule. He comes across a likely suspect: it's a hormone. Hormones are "chemical messengers carried by the blood from one tissue in the body to another". Hormones maintain life, for instance by telling us our body is thirsty, or cold, but they don't cause behaviour. If you're on a diet you have to ignore what your hormones tell you. This can be hard because "sometimes the lobby group is more like a foghorn" and "can be very hard to resist". The evidence becomes clear: mind and body are not separate, they are endlessly intertwined. You can't isolate pure thought, thoughts are "inextricably tangled up with motor circuits". And the conclusion, every bit as revolutionary as Copernicus' assertion that the earth goes round the sun: "Seeing yourself as an inseparable unity of body and brain may involve a shift in your self-understanding, but it is, I believe, a truly liberating one".
And so the second bingo moment kicks in, and there are consequences, huge consequences. Traders need to be physically healthy - fit - to do what they do. They need to learn from top-class athletes, "for they are the people with the most experience of controlling their hormones and emotions in the interests of optimising performance".
Traders need support from family and friends too. If they become isolated, they become less effective. "I am concerned (that) a financial community may develop, as a crisis wears on, into a clinical population." In other words, the reason the financial services sector continues to chase vast convoluted deals, and the reason traders are still losing billions - Kweku Adoboli of UBS, who lost his firm $2.3bn, being the latest in a long line that began with Nick Leeson at Barings in 1995 and shows no sign of abating any time soon - is that they may be verifiably bonkers, albeit temporarily. They are men addicted beyond any hope of redemption. The cure, says Coates, is to get more women on the trading floor, and employ more older men, men who are in control of the Bull-Market Molecule, men who are "less likely to jump into risks before thinking through a wide range of possible outcomes". And there is
little evidence that age impairs judgment in this sector either: check Warren Buffett and George Soros.
On the surface of it, The Hour Between Dog and Wolf is about the physiological and neurological changes that take place within traders' bodies as they do their buying and selling. But Coates, who is affiliated to Cambridge's Judge Business School, disentangles the mind/body dichotomy with forensic skillto show how our bodies and brains are interlinked, and this book has profound implications for the history of philosophy and will, in my view, wobble the foundations of some of philosophy's most sacred tenets.
"If the walls separating brain from body came down," writes Coates, "so too would the barriers between many subjects." Such as economics and medicine, for starters.
And knowing how beautifully the brain is integrated into the body could "bridge the abyss of misunderstanding that has separated the `two cultures' of science and the humanities".
The Hour Between Dog and Wolf is a total gamechanger. Buy it and liberate yourself from a 2,000-year old dead end.

this book is a fascinating read, a real insight into how body and mind conspire with each other to shape the way we make decisions and take risks. don't be fooled by the title, this book applies equally to soldiers and sportsmen, in fact anyone who deals in risks and situations which are subject to sudden and rapid change.