☰ Menu eFinancialCareers

Unfortunately, World Cup hormones could play havoc with markets

Hormonal

Hormonal

Tonight’s the night. First there’s the opening ceremony, involving ‘Pitbull and Jennifer Lopez.’ Then there’s the first match, involving Brazil and Croatia. Then there’s another 64 matches spread over four weeks, which half the world’s population will allegedly tune into at some point.

Banks are compelled to pander to employees’ soccer addiction. It’s standard practice for screens on trading floors to be tuned into the action. And it’s commonplace for public spaces in financial services districts to be dedicated to football until the whole thing is over.

Sadly, however, banks may be exposing themselves to unforeseen operational risks by allowing employees unfettered access to their team’s performance during working hours.

A 2010 study, undertaken during the FIFA World Cup Final between Spain and the Netherlands, found that watching the big match unleashed a torrent of contradictory hormones. Soccer viewers’ testosterone levels were 29% higher when they were watching the final, validating a previous study which found elevated testosterone levels in avid football fans supporting a winning team. But the 2010 study also found that soccer fans had substantially higher (52%) cortisol levels while they watched the match than they when they didn’t. The cortisol effect was particularly pronounced in male football viewers, whose cortisol levels rose 77% in all the soccer excitement.

Hormones are known to affect traders’ behaviour at work. A well known study by Cambridge academic John Coates found that high levels of cortisol lead to irrational pessimism among traders. Similarly, high levels of testosterone have been found to prompt young traders to take ill-calculated risks. On this basis, now be a good time to sell. And July 12th – just before the World Cup final, may be a good time to buy – providing you’re buying the kinds of Brazilian, Italian, German or Spanish stocks that are likely to benefit from the testosterone-fuelled exuberance of traders who support the winning team.

Related articles:

How to present your strategic ideas like a McKinsey consultant, James Gorman edition

These are the sorts of people who are summer analysts at GS, JPM and Deutsche this year

Rookie test takers leave angry, emotional following CFA exam

 

Comments (0)

Comments

The comment is under moderation. It will appear shortly.

React

Screen Name

Email

Consult our community guidelines here