The Neurobiology of Market Madness

We were supposed to be living in a rational world. According to neoclassical economics, people are “rational agents” who logically assess their own best interests and then act accordingly. Like cogs in a Swiss watch, their behavior can be predicted and modeled.

Thanks to the world’s ongoing economic paroxysms that view has largely gone out the window.  Since 2007, everyone – investors, consumers, management— has seemingly jumped from panic to euphoria and now back to panic again.  The economy not as a mathematical system so much as a collective madness.

John Coates is a uniquely well positioned to understand what’s going on. He spent 12 years as a trader in London and New York, working first for Goldman Sachs and then Deutsche Bank. What he saw in real life was totally at odds with economic theory. “It was the dot com bubble,” he recalls. “People had classic, clinical symptoms of mania. They were delusional, euphoric, over-confident — you couldn’t get them to shut up.”

Most traders worth their salt would have figured out how to turn this insight into a a play that would make them a killing on the market. But Coates wasn’t that guy. Instead of stoking his greed, it fueled his curiosity. He wondered: how does what physically goes on inside the brain and body affect the market’s ups and downs? So Coates ditched Wall Street, went back to school, and wound up a research professor in Cambridge University’s neuroscience department. Then, armed with scientific apparatus, he went back to the trading floor. He measured the hormone levels of professional traders as they went about their business, buying and selling. And what he found gave him a surprising insight. Continue reading The Neurobiology of Market Madness

Near Death Experiences: Science and Skepticism

In response to my recent post about near-death experiences (NDEs),  several readers wrote in and described their own brushes with the beyond. Writes Tamara,

I started to panic but no one could hear me, I couldn’t breath, I could barely move. Then I got real calm and reached under me and pulled the plug out without even thinking about it. It was like I was watching myself from outside of my body. My body rolled itself over so I was face up. Then my vision shot out of the bathtub and it was as if I was shooting through the sky, I was running through the grass in our backyard and then back to the sky and then I was in space and the stars were shooting past me.

So here’s the question du jour: was Tamara’s experience an untimely glimpse into the world that awaits us beyond death? Continue reading Near Death Experiences: Science and Skepticism

No, Sullenberger Did Not Screw Up

“Miracle on the Hudson” pilot Chesley Sullenberger has been so lionized since his remarkable feat of airmanship last year that it was inevitable that some kind of backlash must somehow emerge. Today it seems that that chink in his facade has appeared.

The Wall Street Journal is reporting that the NTSB’s final report on the incident will include the fact that pilots who run through the accident in simulators have been able to return the stricken jet safely to LaGuardia:

…tucked inside thousands of pages of testimony and exhibits are hints that, in hindsight, the celebrated pilot could have made it back to La Guardia Airport. Pilots who used simulators to recreate the accident—including suddenly losing both engines after sucking in birds at 2,500 feet—repeatedly managed to safely land their virtual airliners at La Guardia.

The story immediately goes on to emphasize that officials are not slighting Sullenberger’s feat by suggesting that he should have turned back to the airport:

The results haven’t changed the conclusions of National Transportation Safety Board investigators or outside aviation-safety experts, who unanimously agree that Mr. Sullenberger made the right call to put his crippled jet down in the river. Neither he nor his first officer, Jeffrey Skiles, had any assurance that the Airbus A320—which suddenly turned into a 70-ton glider—would be able to clear Manhattan’s skyline had they tried to return to the Queens airport they left minutes before.

And yet the fact that Sullenberger could have returned the plane to the airport must add a hint of tarnish to his reputation. Continue reading No, Sullenberger Did Not Screw Up

Top 10 Secrets of Effective Liars

As I’ve written earlier, human beings have an innate skill at dishonesty. And with good reason: being able to manipulate the expectations of those around us is a key survival trait for social animals like ourselves. Indeed, a 1999 study by psychologist Robert Feldman at the University of Massachusetts showed that the most popular kids were also the most effective liars. Just because our aptitude is hardwired doesn’t mean it can’t improve with practice and skill. Here are ten techniques that top-notch liars use to maximize their effectiveness. (By the way, this information is offered as a way to help detect deceit in others, not to practice it yourself. Honestly!) Continue reading Top 10 Secrets of Effective Liars

“Boy, Was I Wrong About Him”: Why It’s So Hard to Size People Up

Malcolm Gladwell’s bestseller Blink was premised on the idea that our subconscious minds are more gifted than we imagine, and can form uncannily accurate judgments very quickly in very little time. Now, in the past, I’ve criticized certain aspects of this book, and so have other people. But lately I’ve been thinking about the part in which he extols our intuitive ability to quickly understand, with just a few seconds’ exposure, the essence of a person’s personality. He quotes producer Brian Grazer describing how he intuited right away the actor’s exceptionable likeability, and goes on:

My guess is that many of you have the same impression of Tom Hanks. If I asked you what he was like, you would say that he is decent and trustworthy and down-to-earth and funny. But you don’t know him. You’re not friends with him. You’ve only seen him in the movies, playing a wide range of different characters. Nonetheless, you’ve manged to extract something very meaningful about him from those thin slices of experience, and that impression has a powerful effect on how you experience Tom Hanks movies.

This has always struck me as a rather implausible argument. Continue reading “Boy, Was I Wrong About Him”: Why It’s So Hard to Size People Up

Blimps for the Everyman

A heap of rip-stop nylon, damp with dew, stretches 140 feet across a farmer’s hay field in Amherst, Massachusetts. The pre-dawn air is humid, still, and cool — “perfect weather for this kind of thing,” says one of the volunteers bustling around the lumpy shape. A large fan roars to life, drowning out the twittering of the birds and frogs, and the nylon gradually leavens toward the sky, growing into a blob 70 feet high. Inside its bobbing skin, experimental blimp-builder and pilot Mike Kuehlmuss stands in a makeshift cockpit of welded steel tubing. He hits a toggle, and with a roar a jet of burning gas shoots upward.

With aching slowness, the watermelon-shaped envelope lifts off the ground, its jaunty black and yellow stripes and red tail fins bringing to mind something of a carnival jester. Crew members hold the cockpit steady as Kuehlmuss straps himself into a bucket seat salvaged from an old Toyota Corolla. He checks the instruments fastened to the frame in front of him: envelope temperature, fuel levels, compass heading, engine rpm. With a remote switch he triggers another blast of hot gas, then checks the view of from the camera fastened near the near-mounted propellor. All systems are go. The burners roar, and the cockpit levitates off the ground. The 24-hp engine sputters into action, and with all the stateliness and grace of a passing cloud, the huge ship slowly rises and slides away into the sky. The Skyacht – the first of what its builders hope could be an entire industry of personal recreational blimps – is again on the prowl. Continue reading Blimps for the Everyman

My Strange Journey With Antivirus Guru John McAfee

As I stepped from the rickety wooden dock onto John McAfee’s motorboat, I felt like I was in a scene straight out of Heart of Darkness. Here I was, a visitor in a strange land, embarking on a journey up a tropical river in search of the truth about a larger-than-life figure living in self-imposed exile.

“Are we going to find Kurtz?” I joked.

McAfee laughed and gunned the engine. The mood turned more Apocalypse Now, as he cranked the boat up Belize’s twisting New River, our wake surging through the mangrove roots on the bank. Every quarter mile or so the unmarked channel forked, and McAfee assured me that if we took the wrong one we would wind up in Guatemala, hopelessly lost, or else stuck for good, with no way out except to wade mile after mile through nearly impenetrable, crocodile-infested swamp.

Only later would I realize just how truly Kurtz-like the mission had already become. On that day, what had started out as a sympathetic profile for Fast Company would slowly evolve into something more like a take-down, as I realized that McAfee’s position in Belize was much more compromised than I had imagined. Finally I understood why he had kept asking–playfully, I had thought–whether my story was going to be an expose. As the facts emerged, it became clear that I would have to write just that.

What I still don’t understand is whether an expose was what he wanted all along. Did he, like Kurtz, crave the blade? He had, after all, kept bringing up the idea of the expose. And he kept scattering clues of dark import in my path. But why? Was it that he craved the publicity? Was he diverting my attention away from something else? Or did he have some other plan altogether? Given that the subject is an avowed prankster like John McAfee, we may never know the whole truth.

Read the story here.

Follow me on Twitter: @extremefear.

Has BASE Jumping Gotten Boring For You?

I’m talking with Red Bulletin magazine about doing an interview next week with Travis Pastrana, the man who embodies the joyful abandonment of fear. It’s got me thinking about the mindset of people who reach the absolute outer limits of thrillseeking. And that line of thought leads inevitably to this:

[youtube=”http://www.youtube.com/watch?v=UrDwxKNmaOc&feature=player_embedded”]

How do you get the point where this is your form of recreation? I imagine you try skydiving, that gets boring, so you try BASE jumping, and that gets boring; you fly a wingsuit away from the mountain, that gets boring; so you try flying the wingsuit as close to the mountain as you can get. Where do you go from here? Well, one ideas is the project that daredevil wingsuiter Jeb Corliss is working on, trying to figure out how to land a wingsuit without using a parachute. He’s been at it for a few years yet and hasn’t cracked that nut yet, but that’s just as well, because I really can’t imagine what he’d do for an encore.

How the Bravest Are Different

On Saturday, I wrote a post about how the Swedish explorer S.A. Andree carefully observed his own fear reaction as he made his first ascent in a balloon. Intellectually he felt no trepidation about what he was about to do, yet as the craft began to rise he found himself desperately holding on despite himself. I described feeling similarly overwhelmed by fear myself, on several occasions. But I had no word for the phenomenon.

Well, now I have one. It’s called “The Grip.” Continue reading How the Bravest Are Different

Figure Out a Problem, And Make it Impossible to Solve

Today is a beautiful day for a run in New York’s Central Park — sunny and cool, with the trees wearing the first pale-green lushness of early spring. My wife and I were jogging around the park, pushing our 1.5-yr-old in a jogging stroller, and lamenting the difficulty we’ve been having getting our weight down, even though we’ve been exercising a good deal more now that the weather has gotten nice.

Sandra, it turned out, had just been reading an article in the New York Times Sunday Magazine about just this very topic. Gretchen Reynolds delves into the issue of exercise and weight loss, and the discouraging research that has found that, for women especially, exercising more makes you hungrier, so you eat more and wind up counteracting the calorie-burning you’ve been doing. Writes Reynolds:

In practical terms, the results are scientific proof that life is unfair. Female bodies, inspired almost certainly “by a biological need to maintain energy stores for reproduction,” Braun says, fight hard to hold on to every ounce of fat. Exercise for many women (and for some men) increases the desire to eat.

Upon hearing this information, I was of two minds. On the one hand, I was pleased to have an explanation for this annoying phenomenon. On the other hand, I thought: is the urge to find explanations for our behavior ultimately self-defeating? Continue reading Figure Out a Problem, And Make it Impossible to Solve