Comments on: Wall Street’s Winners May Be Determined While They’re Still in the Womb

By: Bob Snyder

Bob Snyder — Thu, 15 Jan 2009 02:26:42 +0000

After reading the original articles, it seems plausible that higher levels of testosterone could lead to higher success because “The researchers studied 44 male traders in London involved in “high-frequency” or “noise” trading, which requires intensely scanning economic data to make very fast trades involving large amounts of money.” (Washington Post) For these types of traders, hesitation is not an option and greater sensitivity to testosterone would most likely be an asset as the article suggests.

“Noise trading is a compulsive / hyperactive buying and selling activity in financial markets, done in the absence of meaningful new information.” This is not applicable to most institutional traders, hedge/mutual fund managers, etc. The study admittedly pertains to only 1 type of trader in an irrational environment. The “herd mentality” is often used to describe such traders as well as “irrational exuberance” which leads to a disconnect between market fundamentals and actual prices. Basically, rational decision making is not a prerequisite for this job. Coates knows this when he says “it is important to note that this study focuses on only one type of trading, and increased confidence and quick reactions may in fact be a hindrance to those trading over long periods of time.” I feel as if the author, Eliza, should have mentioned this as some people may be under the impression that it applies to all investors in general.

Also worth noting:
The 20 month period was between 2004 and 2007. Assuming they started June 1, 2004 (4422.7) – Feb 1, 2007 (6282.2), the Annual Percentage Return for FTSE 100 (The UK equivalent of the S&P) was about 25%. FTSE 100 and the S&P had a strikingly similar trend as well. However, for the purpose of “noise traders” this would not matter much as their returns are dependent on the volatility of the market and not so much the direction.

By: Bob Snyder

Bob Snyder — Thu, 15 Jan 2009 00:56:42 +0000

I understand that the article is merely trying to point to a correlation between risk-takers and exposure to higher hormonal levels while in the womb but I feel that it was a bit of a stretch to link it to Wall St. day traders and success. If the 20 month period of the study was during a mostly bull market it would follow that riskier traders make more money. However, in bear markets they will probably lose more money than long term investors. The expected return of an investment is a product of the risk in the investment. Most traders do not beat the market, and by most i mean nearly all. Without going into too much detail, the study should have taken into consideration the riskiness of the investments by adjusting for the betas of the relative portfolios of the traders. I would like to know how all of those risk takers fared during the collapse of global markets in the past year, my guess is that they lost a proportional amount of money, as in 6x more than those less risky investors.

By: Mona

Mona — Wed, 14 Jan 2009 21:01:38 +0000

I am not a trader, but I am a girlie girl (45 yr. old woman, mother of 3)- who wonders how much testosterone I was exposed to – since my ring and pointer fingers are almost identical in length! Maybe there is some other genetic link to finger length and being a risk taker and confident person.

By: Annie

Annie — Wed, 14 Jan 2009 14:48:22 +0000

I take biology in college so I would like to clarify Geetha’s disbelief. The finger does not feed on the mother’s testosterone. What is meant is that finger length is determined by the level of testosterone in the womb(it is not clear in the article if it is provided by the mother or produced by the baby himself). The level of hormones does affect growth, proportion and size (just look at the steriods SOME atheletes take). In any case, this study is statistically too small to be credible science. Just had a diabolical thought. If this really turn out to be true, would pregnant mothers take testosterone as a pregnancy supplement so their sons will all be successful risk-taking Wall Street high frequency traders? Or if you want a calm son to become a trader for long term investment, you would opt for a bit of testosterone antagonist or even oestrogen?

By: Eliza Strickland

Eliza Strickland — Tue, 13 Jan 2009 23:12:59 +0000

@ Jumblepudding:

We have indeed had an influx of students in these past hours. Hello to you all in Greenville, South Carolina!

By: Evelyn

Evelyn — Tue, 13 Jan 2009 22:17:42 +0000

“Population statistics such as ours give average effects over a population but can be tricky when applied to individuals.” Really? The sample was only 44 individuals, and the results were rather stunning. So either the sample is too small and doesn’t mean much, or the sample is adequate and you can predict quite a bit about any given individual based on their testosterone-sensitivity.

By: Geetha

Geetha — Tue, 13 Jan 2009 20:42:31 +0000

So the finger feeds on the (mother’s) testosterone? Does it say something about the mother on those days then? I didn’t know the baby’s day-to-day testosterone capacity depended on the mother’s level for those months. I thoght palmistry and astrology were for the bored, but now Discovery is as well!

By: Jumblepudding

Jumblepudding — Tue, 13 Jan 2009 20:32:30 +0000

Is this site’s reply system being attacked by high schoolers trying to get extra credit? God bless American education. At any rate, I’m sure they’d find a low ratio in prisons as well because of higher testosterone among criminals. The trick is to rehabilitate lower-level offenders as day traders.

By: catherine T

catherine T — Tue, 13 Jan 2009 20:13:28 +0000

but how are they able to test in the womb of you are able to be on wall street?

By: Jeremy

Jeremy — Tue, 13 Jan 2009 20:09:33 +0000

tHIS ARTICLE MAKES PERFECT SENSE, I TOTALLY GET WHAT ITS SAYING

By: Shawntia R

Shawntia R — Tue, 13 Jan 2009 20:05:33 +0000

I really dont understand this article im only 16 what do you expect im confused.

By: Dap J

Dap J — Tue, 13 Jan 2009 19:50:31 +0000

So basicly what they are saying is that the index finger and the middle finger(ring finger) helps them make money or that people who use those fingers are used to it or have a better testosterone or something really i don’t understand this at all i am only a 10th grader

By: tatayana r.

tatayana r. — Tue, 13 Jan 2009 19:35:13 +0000

THIS ARTICLE MAKES PERFECT SENSE, I TOTALLY UNDERSTAND WHAT YOU ARE SAYING.

By: Elizabeth, V.

Elizabeth, V. — Tue, 13 Jan 2009 18:21:23 +0000

So because of this discovery, are men trying to get a job at wall street going to have index-to-ring-finger ratio inspections?? Only people with long ring fingers can work on wall street?? Even if men should not be scrutinized, because of this. They may still be, due to this article.

By: codylicious

codylicious — Tue, 13 Jan 2009 18:12:48 +0000

I think there is no way you can determine the sucsess of a person by studying there digits. Things like childhood, home life, personality, and physical appearence contribute to sucess.