cashinmattress Posted September 29, 2011 Share Posted September 29, 2011 link What makes individual stockbrokers blow billions in financial markets with criminal trading schemes? According to a new study conducted at a Swiss university, it may be because share traders behave more recklessly and are more manipulative than psychopaths.Two weeks ago, yet another case of rogue trading shocked the financial world when UBS trader Kweku Adoboli was arrested for allegedly squandering some $2.3 billion with a risky and unauthorized investment scheme. The 31-year-old, who had been based in London for the Swiss bank, remains in jail. The bank's chief executive Oswald Grübel, meanwhile, has resigned over the scandal -- the third major embarrassment to rattle the institution in just a few years. The situation mirrors a similar scandal at French bank Société Générale, where another young "rogue trader," Jérôme Kerviel , gambled away billions in 2007 and 2008. But why do these situations keep arising in the financial world? According to a new study at the University of St. Gallen seen by SPIEGEL, one contributing factor may be that stockbrokers' behavior is more reckless and manipulative than that of psychopaths. Researchers at the Swiss research university measured the readiness to cooperate and the egotism of 28 professional traders who took part in computer simulations and intelligence tests. The results, compared with the behavior of psychopaths, exceeded the expectations of the study's co-authors, forensic expert Pascal Scherrer, and Thomas Noll, a lead administrator at the Pöschwies prison north of Zürich. "Naturally one can't characterize the traders as deranged," Noll told SPIEGEL. "But for example, they behaved more egotistically and were more willing to take risks than a group of psychopaths who took the same test." Particularly shocking for Noll was the fact that the bankers weren't aiming for higher winnings than their comparison group. Instead they were more interested in achieving a competitive advantage. Instead of taking a sober and businesslike approach to reaching the highest profit, "it was most important to the traders to get more than their opponents," Noll explained. "And they spent a lot of energy trying to damage their opponents." Using a metaphor to describe the behavior, Noll said the stockbrokers behaved as though their neighbor had the same car, "and they took after it with a baseball bat so they could look better themselves." The researchers were unable to explain this penchant for destruction, they said. No moral compass? Delusions of grandeur? Questionable education? No qualifications? Flawless liar? Welcome to investment banking. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted September 29, 2011 Share Posted September 29, 2011 (edited) link No moral compass? Delusions of grandeur? Questionable education? No qualifications? Flawless liar? Welcome to investment banking. You may want to change the heading, stockbrokers arent traders, brokers work on commission without risk, traders take risk (and pass it onto someone else via limited liabilitiy) In short your answer is the state mandated protection/welfare payment of limited liability, introduced when a few friends of the tories were going to lose their shirt over LLoyds of london, isnt govt great Edited September 29, 2011 by Tamara De Lempicka Quote Link to comment Share on other sites More sharing options...
Democorruptcy Posted September 29, 2011 Share Posted September 29, 2011 Doh!! He goes and bad mouths the MP thread questioning why it is the main forum, then posts one that arguably should be in the investment section Quote Link to comment Share on other sites More sharing options...
cashinmattress Posted September 29, 2011 Author Share Posted September 29, 2011 Doh!! He goes and bad mouths the MP thread questioning why it is the main forum, then posts one that arguably should be in the investment section I think Matt Groening might be sending you a letter for the unapproved usage of his creation. Quote Link to comment Share on other sites More sharing options...
interestrateripoff Posted September 29, 2011 Share Posted September 29, 2011 Still at least they don't cost people their jobs. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted September 29, 2011 Share Posted September 29, 2011 (edited) One of the hardest jobs in the world trading, no seriously. After 5 years 95% will either be burned out or shown as being rubbish at it. It's probably got one of the highest attrition rates of any profession. Only a few hundred ride around in DB7's, so I'm led to believe, i.e. those who have made a pact with the devil. its really not that hard (using someone elses account makes a huge difference to the emotional stress), the hours are long but the remuneration is more than adequate, ive never stuffed giblets up a turkeys backside but i doubt it would have been easier / preferable all things considered Edited September 29, 2011 by Tamara De Lempicka Quote Link to comment Share on other sites More sharing options...
northwestsmith2 Posted September 29, 2011 Share Posted September 29, 2011 Article gets it wrong IMVHO. Currency you hedge, so I pay £1 for a steel bolt and 12 months later I pay £1 But the bolt costs 3$ so I hedge or bet either way on the currency, as I'm happy to pay £1 for a steel bolt. No matter what happens I lose on one bet and win on another making no profit. I hedge and it will cost £1 (minus a tiny 1% or so for the service) Then it's very easy to leave out one side of the hedge, and make all that cash in pure profit, pure cash money that you can spend and nobody knows about it because all the owner wants is a zero return, no loss, no gain. Until your bet goes wrong and the hedge comes into play. Quote Link to comment Share on other sites More sharing options...
Georgia O'Keeffe Posted September 29, 2011 Share Posted September 29, 2011 Not doing it now then I assume, unless you are trading off your own account. Do you own a DB7? i own my own teeth Does that count Quote Link to comment Share on other sites More sharing options...
200p Posted September 29, 2011 Share Posted September 29, 2011 Rhetorical Question: If you knew you had to become a psychopath to become incredibly rich, would you do it? Quote Link to comment Share on other sites More sharing options...
A.steve Posted September 29, 2011 Share Posted September 29, 2011 If you knew you had to become a psychopath to become incredibly rich, would you do it? I strongly suspect there are two distinct ideas about what a psychopath actually is. The adjective has very negative connotations - but, in a clinical context, it doesn't necessarily mean that the psychopath is more dangerous or unpleasant than someone who's motivated by excessively strong emotions. A trader is advantaged by being calm, focused, analytical and unswayed by emotion. These are not negative traits - but can easily be mistaken for a lack of empathy and remorse... which takes you from a description of a clever dedicated person to someone with a mental illness. Interesting questions surround not what mental state you'd accept (as that's not something you control) but what taboos you'd be willing to break; what sacrifices you'd accept; what ethical boundaries you'd cross. Other interesting questions ask what would define rich for you... is it about your 'score-card' (personal balance sheet) or is it about tangible assets or is it about taking control of your own life? I feel genuinely sorry for anyone whose objective is to own the most expensive things or to maximise their bank balance, because it won't make them happy. Quote Link to comment Share on other sites More sharing options...
Tiger Woods? Posted September 29, 2011 Share Posted September 29, 2011 link No moral compass? Delusions of grandeur? Questionable education? No qualifications? Flawless liar? Welcome to investment banking. There are half a million psychopaths in the UK. Only the best of them can become traders. Simple supply and demand. Quote Link to comment Share on other sites More sharing options...
shipbuilder Posted September 29, 2011 Share Posted September 29, 2011 Rhetorical Question: If you knew you had to become a psychopath to become incredibly rich, would you do it? I'm certainly no psychologist, but from what I understand from psychopathy, you probably wouldn't be able to enjoy it. No riches would ever be enough. Quote Link to comment Share on other sites More sharing options...
porca misèria Posted September 29, 2011 Share Posted September 29, 2011 A fine psychlepath ... Quote Link to comment Share on other sites More sharing options...
billybong Posted September 29, 2011 Share Posted September 29, 2011 If you behaved like a financial psychopath and knew that the government (taxpayer's money) would bail you out when you failed would you do it. Quote Link to comment Share on other sites More sharing options...
Recommended Posts
Join the conversation
You can post now and register later. If you have an account, sign in now to post with your account.