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The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust Hardcover – International Edition, May 15, 2012

by John Coates (Author)
4.4 out of 5 stars 637 ratings
A successful Wall Street trader turned Cambridge neuroscientist reveals the biology of financial boom and bust, showing how risk-taking transforms our body chemistry, driving us to extremes of euphoria or stressed-out depression.
 
The laws of financial boom and bust, it turns out, have a lot to do with male hormones. In a series of startling experiments, Canadian scientist Dr. John Coates identified a feedback loop between testosterone and success that dramatically lowers the fear of risk in men, especially young men; he has vividly dubbed the moment when traders transform into exuberant high flyers "the hour between dog and wolf." Similarly, intense failure leads to a rise in levels of cortisol, which dramatically lowers the appetite for risk. His book expands on his seminal research to offer lessons from the exploding new field studying the biology of risk.
 
Coates's conclusions shed light on all types of high-pressure decision-making, from the sports field to the battlefield, and leaves us with a powerful recognition: to handle risk isn't a matter of mind over body, it's a matter of mind and body working together. We all have it in us to be transformed from dog to wolf; the only question is whether we can understand the causes and the consequences.
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  1. Print length
    320 pages
  2. Language
    English
  3. Publisher
    Random House Canada
  4. Publication date
    May 15, 2012
  5. Dimensions
    6.27 x 1.22 x 9.32 inches
  6. ISBN-10
    0307359670
  7. ISBN-13
    978-0307359674
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Editorial Reviews

Review

NATIONAL BESTSELLER

FINALIST 2012 - Wellcome Trust Book Prize
FINALIST 2012 - Financial Times and Goldman Sachs Business Book of the Year Award

“Vivid…. Vibrant.”
—Nature
 
“Compelling.”
—New Scientist
 
“A great book.”
—Slate  
 
“If anyone is qualified to unify the seemingly disparate subjects of financial markets and neurology, it’s John Coates.... The Hour Between Dog and Wolf is well executed and makes its argument convincingly.”
—The Daily Beast
 
“Stunning research.” —Forbes
 
“Absorbing.”
—Bloomberg Businessweek
 
“Provocative and entertaining.”
—Publishers Weekly  

“The variously debilitating or exhilarating physiology of stress and challenge is the subject of this compelling exploration of human beings in overdrive. John Coates brings finely honed scientific insight to his  insider’s look at the world of high-wire high finance to produce a vivid depiction of the minds, brains and bodies of economic movers and shakers living on the edge.”
—Gabor Maté M.D., author of When the Body Says No: The Cost of Hidden Stress
 
“The picture of humans as rationale economic machines has gone down the tubes. This book looks at the biology of why Homo economicus is a myth, and no one is better positioned to write this than Coates—he is a neuroscientist AND an economist AND an ex–Wall Street trader AND a spectacular writer. A superb book.”
—Robert Sapolsky, professor of neurology and neurosciences, Stanford University

"A vivid and brilliantly written narrative: by integrating his knowledge of neuroscience with his experience as a Wall Street trader, Coates pulls back the curtain on the physiological mechanisms that prepare some individuals to thrive and others to be devastated by confronting risk. The Hour Between Dog and Wolf ensures that future models of risk taking will include the important role of the nervous system.”
—Stephen W. Porges, Director, Brain-Body Center, Department of Psychiatry, University of Illinois at Chicago
 
“A terrific read—better than any amount of economic analysis because it explains what lies at the root of economic disaster—those biological drivers that cause sane and clever people to make catastrophic decisions. Every banker should be made to read it!”
—Rita Carter, author of Mapping the Mind

About the Author

John Coates is a senior research fellow at the University of Cambridge. He previously worked for Goldman Sachs and ran a trading desk for Deutsche Bank in New York. In 2004 he returned to Cambridge to research the biology of financial risk-taking. His work has been published in the Proceedings of the National Academy of Sciences and the Financial Times, and has been cited in the New York Times, Wall Street Journal, The Economist, New Scientist, Wired and TIME. Coates has appeared on CNN, CNBC, BBC, CBS Evening News and Good Morning America. He was born and raised in Canada and now lives in England with his wife and two sons.

Product details

  • Publisher ‏ : ‎ Random House Canada; First Edition (May 15, 2012)
  • Language ‏ : ‎ English
  • Hardcover ‏ : ‎ 320 pages
  • ISBN-10 ‏ : ‎ 0307359670
  • ISBN-13 ‏ : ‎ 978-0307359674
  • Item Weight ‏ : ‎ 1.1 pounds
  • Dimensions ‏ : ‎ 6.27 x 1.22 x 9.32 inches
  • Customer Reviews:
    4.4 out of 5 stars 637 ratings

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John Coates

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Customer reviews

4.4 out of 5 stars
637 global ratings

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Customers say

Customers find the book insightful and fulfilling, packed with information about risk taking. They describe it as an intelligent and well-written read, particularly noting its value for traders.

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38 customers mention "Insight"38 positive0 negative

Customers find the book insightful and fulfilling, packed with information, with one customer noting its usefulness in understanding the actions of others.

"...It also has much advice at an individual level, how to condition yourself to become better at handling stress. All in all, loved this book!" Read more

"...This is a powerful and counterintuitive insight...." Read more

"I found this book both informative and entertaining...." Read more

"...room stories, author John Coates has written an important book for finance industry professionals who want to expand their understanding of the..." Read more

36 customers mention "Readability"31 positive5 negative

Customers find the book highly readable, describing it as intelligent and well-written, particularly suitable for traders.

"What an amazing read...." Read more

"...people in high stress, fast-paced business environments, to function more effectively. That would be very useful...." Read more

"...Additionally, I found the book entertaining beyond the science with his personal stories in the market." Read more

"...Using both plain language and vivid trading room stories, author John Coates has written an important book for finance industry professionals who..." Read more

7 customers mention "Risk taking"7 positive0 negative

Customers appreciate the book's focus on risk taking, with one customer noting how it helps understand pressure and risk, while another mentions how it explains reactions to pressure and risk.

"The Hour between the Dog and the Wolf is about risk taking, the nervous system and our biochemistry and how they all relate to each other in various..." Read more

"This is probably the most unique perspective on risk taking I've read...." Read more

"...It explains body and mind battle when trading. Reward and risk, and how our body respond to it...." Read more

"...come away with some amazing insights about yourself and how you react to pressure and risk." Read more

Top reviews from the United States

  • Kindle Customer
    5.0 out of 5 stars Must read for any trader
    Reviewed in the United States on June 16, 2023
    Verified Purchase
    What an amazing read. The first time I have seen someone connect biology and trading, and make such amazing and convincing arguments and observations in the process.

    I think this is a must have in any traders bookshelf. When you want to take a break from charts and financial analysis, pick this one up and you will learn important information.

    The book is all about explaining what is happening in our body when we trade. A behind the scenes look that shows how our nervous system combined with hormones interact with our body and what happens when we trade.

    What happens when we take on risk, when we manage the positions, take on more risk, etc. What happens when we succeed wildly and also when we crash badly.

    The book ends with some high level policy advice that I agree: markets would benefit from increasing the number of women and older men participating in them. It also has much advice at an individual level, how to condition yourself to become better at handling stress.

    All in all, loved this book!
    8 people found this helpful
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  • Ian Mann
    4.0 out of 5 stars a time when we could not easily distinguish one from the other
    Reviewed in the United States on April 12, 2017
    Verified Purchase
    Dusk, in medieval times, was the hour between dog and wolf, a time when we could not easily distinguish one from the other. There was a pervasive fear that the dog you knew could become a wolf.
    Author John Coates worked on Wall Street, in the 1990s, trading derivatives for Goldman Sachs, then Merrill Lynch, and finally running a desk for Deutsche Bank. During this time, the Nasdaq rose from 600 to a peak of just over 5,000! This spectacular rise was unsupported by any hard financial data. Translates into non-trading terms that means that the growth was based on a widely accepted delusion.
    The economist, John Maynard Keynes, noted in the 1930s that markets could remain irrational longer than investors could remain solvent. In 2000, the Nasdaq collapsed dropping more than 3,000 points in about a year.
    “While they last, (market) bubbles are fun,” notes Coates. During this period, he observed trader’s turn from dog to wolf. Investors egged on by traders were putting money into companies with inexplicable business models, in internet industries they did not understand. Coates noted at the time that it was almost impossible to engage in a reasoned discussion with either the owner or the investors.
    According to folk wisdom, behind this type of mayhem lies overwhelming greed. It leaves no place for the sober thought that what cannot last, will not last.
    Coates observed traders moving from assessing risk and making professional judgement accordingly, to believing that they knew what was going to happen. He observed “they even walk differently: more erect, more purposeful, their very bearing carrying a hint of danger: ‘Don’t mess with me,’ their bodies seem to say. ‘I can handle anything.’”
    Their behaviour caught Coates’ during the dot.com era. It was undeniable that people were changing. Traders were slowly becoming euphoric and delusional. They were placing ever larger bets on ever worsening risk-reward trade-offs.
    This type of behaviour has been identified in other areas, particularly politics. Lord David Owen, the former British Foreign Secretary, a neurologist by training, called the disorder, the Hubris Syndrome. It is characterised by “recklessness, an inattention to detail, overwhelming self-confidence, and contempt for others.”
    What struck Coates at the time was the relative immunity of women to this frenzy.
    Some had suggested that the mood was driven by the use of cocaine, but the extent of drug use was wildly exaggerated. Coates became convinced that we should be looking at traders’ biology. He hypothesised that the extreme overconfidence and risk-taking displayed during bubbles may be a chemically induced pathological behaviour. This could explain the difference between male and female responses.
    Coates retired from Wall Street and returned to the University of Cambridge, where he had earned his Ph.D in economics, and spent the next four years retraining in neuroscience and endocrinology. He designed experiments to test the hypothesis that the “winner effect” exists in the financial markets. The “winner effect” has been identified in animals who have won fights, and now with even higher testosterone, go on to more risky fights. A similar phenomenon can be observed in sportsmen.
    Through observation and experiments, Coates and others have been able to identify how our physiology actually determines, not simply affects, behaviour.
    This is a powerful and counterintuitive insight. In the west, we have been raised on the notion that our brains control our bodies, but reliable science is fast showing the reality is just the opposite.
    Kehaneman and Twersky studied the effects of behaviour on economics throughout the 20th century and won a Nobel Prize for their work. They showed, put simply, how economics is not a function of rational man making rational decisions, but rather that our minds affect our economic decisions in ways we are unaware. Coates highlights the step beyond this – our bodies actually control our thinking in ways we are unaware.
    Consider a cricket fielder at silly mid-on, a position extremely close to the batsman. The ball leaving the bat can travel at speeds of up to 160 kilometres an hour. Crouched four metres from the batsman does not give the fielder enough time to register the trajectory of the ball consciously. His react to this lethal projectile occurs in 90 milliseconds. The body does the thinking before the mind knows.
    The speed here is similar to the speed at which decisions have to be made in trading and investment. There is no time for a thorough analysis and research. Many well-known investors, including George Soros, admit being guided, in part, by physiological responses to positions. Soros reports that he used the onset of acute back pain as a signal that there was something wrong with his portfolio.
    The notion of “gut feeling” implies that in even the most complex mental tasks, such as understanding the stock market, our bodies are giving guidance. Knowing when to take the guidance and when to ignore it is not a simple matter. It is here that knowledge and experience come into play.
    Our bodies have evolved over centuries to respond to physical risks. Financial risk carries a similar threat, not of risk to life but certainly of risk to lifestyle and social status. Little wonder that the chemical or hormonal responses are similar.
    Much has already been learned about dealing with stress situation from Sports Science. There is evidence that just as physical toughness can be developed to peak levels as seen in world class athletes, so too can mental toughness. This toughness would allow people in high stress, fast-paced business environments, to function more effectively.
    That would be very useful.

    Readability: Light ----+ Serious
    Insights: High +---- Low
    Practical: High ---+- Low

    * Ian Mann of Gateways consults internationally on leadership and strategy.
    37 people found this helpful
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  • Kevin Wilson
    5.0 out of 5 stars Overview of Stress on Risk Taking and Entertaining Read
    Reviewed in the United States on February 21, 2023
    Verified Purchase
    I found this book both informative and entertaining. I'm a full time futures trader myself and have been genuinely curious, like the author, about the effects of stress on decision making under uncertainty. I wondered if it could be considered chronic mild stress, or worse, chronic acute stress. The author provides a lot of information about the science behind a not well known profession (in terms of stress). Additionally, I found the book entertaining beyond the science with his personal stories in the market.
    6 people found this helpful
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  • J. Mckeough
    5.0 out of 5 stars Market Behavior is Human Behavior
    Reviewed in the United States on September 21, 2012
    Verified Purchase
    Investors are well served by studying behaviorial and decision-making psychology broadly and then selectively transferring that knowledge to financial markets. Arguably, the most influential readings come from authors who are not directly involved in financial markets. For example, the Psychology of Intelligence Analysis by former CIA staffer Richard Heuer captures the pitfalls of making decisions when faced with incomplete information. Stepping back further, to readings about the emerging discipline of neuroeconomics, requires a basic understanding of brain science and physiology. There are some useful layman's guides to these subjects, such as Brain Rules by John Medina but what's been missing is a book that ties together a cohesive explanation of why your brain and physiology drive your behavior and how this collective impact can translate into a greater understanding of market behavior. The Hour Between Dog and Wolf succeeds in this objective. Using both plain language and vivid trading room stories, author John Coates has written an important book for finance industry professionals who want to expand their understanding of the biological underpinnings of behaviorial finance.

    The book's fictitious examples of trading floor scenarios are particularly effective. Science always becomes more interesting when its explained with personalized situations. Coates has succeeded in connecting the neuroscience with the behaviorial / cognitive psychology that's most relevant to investors. Finally, the 'suggested reading' section is excellent, a primer for further study that's accessible to non-scientists.
    5 people found this helpful
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Top reviews from other countries

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  • Janina De
    5.0 out of 5 stars Fun to read
    Reviewed in Germany on April 24, 2023
    Verified Purchase
    Greatly written book about the biology of trading with lots of background information. I enjoyed reading this because I went through the trader's blues from bust to boom a couple of times myself and books like this help to understand what's happening to me when I run into problems.
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  • Claude Rivard
    5.0 out of 5 stars The behavioral investor
    Reviewed in Canada on December 22, 2024
    Verified Purchase
    Pour mieux comprendre la psychologie des investements
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  • Lector ecológico
    5.0 out of 5 stars Muy Bueno
    Reviewed in Spain on September 28, 2014
    Verified Purchase
    El libro describe los principales tipos de hormonas que afectan a nuestro cuerpo y a nuestro comportamiento, con un enfoque centrado en actividades competitivas como deportes y trading. También explica cómo dichas hormonas afectan positiva o negativamente a nuestra salud a largo plazo y cómo el estado de nuestro cuerpo también influye en nuestro comportamiento, modificando nuestras decisiones conscientes sin que nos demos cuenta.
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  • Baer
    5.0 out of 5 stars A fascinating book for everyone interested in the working of the human mind.
    Reviewed in the United Kingdom on November 28, 2019
    Verified Purchase
    Fantastic book - fascinating content, engaging writing, widely relevant and applicable (far beyond the trading room). The book really is about how the brain works and some specific effects driving decision-making. I reference the book frequently in my consulting work.
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  • ダニエル
    4.0 out of 5 stars I like it, but
    Reviewed in Japan on October 3, 2018
    Verified Purchase
    The author has done a good job explaining why we do some irracional things when trading. But I was expecting a little more about how we can avoid this kind of behavior
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