ABC TV tonight: Catalyst

our obsession

our obsession

Usually an interesting show, Catalyst on the ABC tonight, (Thursday 26th March 2000 hours, Vic programming).

"Explores the science of behavioural economics, which tries to predict how biology impacts on actions of people involved in the financial markets."
 
Hmmm I don't seem to be able to find the detonate button...we can delete this too, was only for forum notification, and it kind of didn't have anything we didn't already know...(yes, somersoft had it all first in investor psychology!!).

It was as if they had taken 4 threads from here and made it into a brief story.

Please delete the thread when you get a moment. Show is over.

Thankyou.
 
our obsession said:
Hmmm I don't seem to be able to find the detonate button...we can delete this too, was only for forum notification, and it kind of didn't have anything we didn't already know...(yes, somersoft had it all first in investor psychology!!).

It was as if they had taken 4 threads from here and made it into a brief story.

Please delete the thread when you get a moment. Show is over.

Thankyou.
Click to expand...

still another few minutes of the show to go here in Perth !
 
Transcript available..

Oh, no, please don't delete the thread, on hindsight thoughts, just because I am familiar with biological influence(s) upon people's behaviour doesn't mean other forum members necessarily have studied or researched it. Here is transcript link:

http://www.abc.net.au/catalyst/stories/2525497.htm

Excerpt to give an idea of content:

*NARRATION
Meet Homo economicus. He’s rational … acts out of informed self interest … and he underpins the last 100 years of mainstream economic theory. But as a tidal wave of toxic debt swamps our planet, even his most fervent believers are beginning to lose faith.

Alan Greenspan:
Those of us who have looked to the self interest of lending institutions, to safeguard shareholder interests, myself especially, are in a state of shocked disbelief.

Dr Jonica Newby:
So if even the high priest of the market, Alan Greenspan is having a mea culpa moment, is it now time to declare Homo economicus extinct?

NARRATION
In making economics a mathematical science – did we somehow forget biology? Based in the UK, Dr John Coates is one of a newer breed of economist known broadly as behavioural economists. And he’s no ivory tower theorist. His doubts about traditional economic doctrine began back in the 90’s – when he spent a decade as a young master of the universe – a trader - on Wall Street.

Dr. John Coates:
During the dot-com bubble, people started acting in a very odd manner. They were displaying almost classical clinical symptoms of mania. They were delusional, they were over confident, they were euphoric, they had racing thoughts and diminished need for sleep. I mean these were clinical symptoms.

NARRATION
Ah I started suspecting that there was a chemical involved. And no, the chemical Dr Coates is talking about doesn’t come as a powder. It comes from a completely different field – biology – and a principle known as the winner effect.

Dr Jonica Newby:
Right, may the best lizard win. I think we’ve got a winner.

NARRATION
When a male wins a fight, he’s more likely to win the next one – that’s the winner effect.

Dr Jonica Newby:
Ooh – he’s actually up against a much larger opponent – look at this

NARRATION
The effect is generally mediated by steroid hormones – winners have elevated testosterone, which increases their confidence and appetite for risk. Losers have a drop in testosterone, and a rise in the stress hormone cortisol – they become risk averse.

Dr John Coates:
What happens in the winner effect in the wild is that after a while these male animals have higher and higher levels of testosterone they become overconfident, they take too much risk. This was a beautiful model to me, for what was going on with male traders. So did this animal model apply to that high beast of the finance jungle, the trader?

NARRATION:
Abandoning New York to study neurochemistry in England, John Coates went back to the trading floor to find out.

Dr John Coates:
What we found was that when the traders had higher levels of testosterone in the morning, they made a lot more money for the rest of the day than they did on days when they had low testosterone. We also found that cortisol, which is strongly influenced by conditions of uncertainty, was spiking up very strongly on days when the market was volatile.- up to five hundred percent, which is an enormous increase in cortisol. I think it comes as a bit of a shock to males to find out that they're as hormonal as they always thought women were but it's true.

NARRATION
For a small study, it made a big impact – because it gave a clear rationale for how one person might perceive risk or opportunity depending on their hormonal state.

Dr John Coates:
We don't think biochemistry explains what starts a bubble or a crash. We do think however that steroids can exaggerate a bull market and turn it into a bubble. A bull market can almost be seen as a market with roid rage. .....and so on, rest of transcript/story is on the site.
 
OO,

I actually found the 2nd part of the program about bubbles more interesting........:cool:, but thanks for the tip.

What was the deal with the lengths of the traders fingers and their testosterone levels.......??

ciao

Nor
 
The bubbles and their origins was fantastic, loved it...I didn't realise that about the Chinese swimming centre, tip it over and how strong/stable the construction is. Am thinking what great construction for tornado prone, cyclone prone areas...even, earthquake?

Rob Williams posted a thread about the fingers a while ago, it's here somewhere:

http://www.somersoft.com/forums/showthread.php?t=48718

Handy thread. Few pointers actually.
 
What the hell is this thread about?

Sounds like a bunch of lefty-academia "let's do a study to get a reseach grant" stuff.

Mind you; I have noticed that the eyebrows on the bank tellers are particularly longer than the customers' are.

hmmm.....that's gotta be worth fifty grand in a study grant for me.
 
Bayview:
What the hell is this thread about?
Click to expand...

Some interesting stories on the ABC show Catalyst.

1.The first story was Risky Business:

"The emerging science of ‘behavioural economics’ is now showing that hormones like testosterone and cortisol may be causing supposedly rational traders to make irrational decisions. Could ignoring human biology be a risky business? Jonica Newby ventured on to the trading floor."

Link to the film replay of the story:

http://www.abc.net.au/catalyst/stories/2525497.htm

If you are unable to watch video links the transcript is there too.

-----------------------------------------------------------

2. Second story was (maths and physics) Bubble Engineering

"Back in the 19th century a Belgian physicist named Joseph Plateau was fascinated by the way bubbles form and combine.

His mathematical theories opened up a branch of research that finds applications in surprising places.

Paul Willis reports on how Plateau’s Rules are instrumental in the design of some truly remarkable buildings including the Beijing National Aquatic Centre."

Link to the film of story, and also transcript if you are unable to play:

http://www.abc.net.au/catalyst/stories/2526116.htm
 
An intuitive thread. If investors could understand their own mindset before they invested in a particular investment class, they'd have fewer sleepless nights
 
BayView said:
What the hell is this thread about?

Sounds like a bunch of lefty-academia "let's do a study to get a reseach grant" stuff.

Mind you; I have noticed that the eyebrows on the bank tellers are particularly longer than the customers' are.

hmmm.....that's gotta be worth fifty grand in a study grant for me.
Click to expand...

Daniel Kahneman won the 2002 Nobel prize for his work on behavouural economics.

Here he is speaking recently.
http://fora.tv/2009/05/15/Nobelist_Daniel_Kahneman_on_Behavioral_Economics
 
In my opinion this is the 'secret' of investing.

I cannot over emphasise how important this variable is in determination of long term wealth creation.
As humanbeings we like to have control over our destination and that includes our investments.
The development of financial mathematics has resulted in the ability to reasonably price and value assets and their underlying derivatives. But the development of financial mathematics has to be based on the assumption that the market opperates under the efficient market hypothesis. The efficient market hypothesis nullifies the impact of the variable of behaviourable science by assuming that humans act in a rational maner at all times.

This key assumption is a fallacy. Exclusion of the variable in pricing models distorts the 'correct' market price. Hence my arguments that the market is actually opperating in a state of disequilibrium.

To make matters worse the behaviourable science variable is not constant, it changes from one point in time to another, thus it cant be factored into an efficient way of pricing an asset.

Recognition of this inability to price an asset efficiently can lead us to be a better investor because we then demand a margin of error to compensate us for the uncertainty.

This is linked into my point about pricing perceived risk into our valuation models.
http://www.somersoft.com/forums/showpost.php?p=553994&postcount=20
 
yay - lets start a movement to supress emotion even further by trying to make men feel guilty about having testosterone.

yes, the GFC is all men's fault. all male traders should be chemically castrated before being allowed to trade with anyone else's money - but women are okay, they have their "no penis" gyms and high tea....:rolleyes: i reckon the feminists are just plain jealous they their pituatary gland lacks a hormone exclusive to men on such massive proportion that ALLOWS such short sighted, narrow minded judgements...

*ducks and runs for cover*

that the market is actually opperating in a state of disequilibrium.
Click to expand...

i think i've commented on this before - it's absolutely true. there's no other way to make a profit otherwise.

you need to be able to feel the upcoming momentum and trade in said direction. much like a see-saw, if you can;t "feel" the momentum, one person will remain up, and the other down.
 
But that's it BC....it's wonderful! (Testosterone), just be aware of running it, not it running you. Recognising the "force"...

Men don't need to be or feel guilty for being male! (just as women for being female), and remember we both share the big "T" anyway.

It's a wonderful asset.

There are things about wealth creation that I need to make myself aware of, watch for as female...just as much so. Perhaps more so? But it's probably more about the individual anyway, rather than by gonad type and formation. When it all boils down.

Like with any other relationship(s) we have in our lives, what "we" bring to it, our gender? our temperament/personality, life experiences, knowledge, creativity...it's endless. And it's endlessly interesting.
 
Last edited:
VYBerlinaV8:
And yet we cop grief if we suggest that female decision making becomes less than logical due to hormones...
Click to expand...

http://www.nrc.nl/international/Fea...like_women,_need_each_other_to_relieve_stress

Actually another interesting piece of (early days yet) work:

From link:
Female rats, like women, need each other to relieve stress
29 May 2009

Stress can lead to anxiety and depression, which women are more likely to suffer from than men. However, most research is done on male lab animals - until now.

By Nienke Beintema

The female brain reacts differently to stressful situations, distress and depression than the male brain. Research in psycho-pharmacology - the study of drug-induced changes in mood and behaviour - however, is primarily done with male lab animals and therefore provides a distorted picture, Dutch researchers say.
Click to expand...

...and

Excerpt:
Hormones do not make females more resilient to stress, however, because the hormone levels fluctuate and alter the brain activities. "Those fluctuations make women more vulnerable to stress. Depression and anxiety mostly strike during times when there are severe changes in hormone levels. Not so much during their monthly periods, but after giving birth, during puberty or during menopause."


Through the course of evolution, female animals seem to have developed a strategy to cope with this: social support. Women mammals lick each other or lie against each other in times of stress. Ter Horst and his team discovered that female rats recover from stress better when they are surrounded by those of the same sex..
Click to expand...

Obviously this is early work, the article needs to be read in context and the comment of Ter Horst is important:

Ter Horst doesn't like translating his results to human situations, but here he makes an exception. "When women go through something stressful, they want to talk about it, again and again. That relieves their stress. Men don't have that desire so much."
Click to expand...

More interesting work being done.
 
Had to laugh OO, whilst reading the second para of your middle quote. I was imagining the men on here reading it and getting a little hot and bothered :p:D.
 
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