Friday, September 26, 2008

Ideas and Inspirations at the End of a Volatile Week

* More On Risk Taking - My recent post focused on personality factors that are associated with risk-taking in financial situations. Studies also show that brain mechanisms and endocrine levels are associated with risk-seeking and risk-aversion. What is on a trader's mind at the time of decision making seems to affect the nature of the decision.

* Perspectives on the Financial Rescue Package - How the government responds to the credit crisis affecting the financial system will impact markets for quite a time to come. Charles Kirk offers a number of valuable links that will bring readers up to date; many of the impacts on markets are chronicled by Abnormal Returns. Trader Mike provides a number of worthwhile updates, including how everything is now affected by financial stocks and why this has been a difficult trading environment. As Dash of Insight notes, the political process is making passage of a plan difficult. Daily Options Report offers some good and tough questions about the rescue; Ray Barros questions the wishful thinking behind the rescue.

* Should We Stop Using Stops? - CXO Advisory reviews research on the effectiveness of stop loss mechanisms in trading.

* Overbought and Oversold - Bespoke offers a nice look, sector by sector, at whether stocks are overbought or oversold.


Dr Bruce Hong said...

That study that you referenced shows that the Dopamine Reward-Prediction sites (The striatum and nucleus accumbens) lit up. These areas, along with the amygdala and the hippocampus are important in giving an "emotional tone" to the process of risk-reward calculations.

As far as studies withwomen are concerned, I have two references that suggest how those researchers may have approacked the studiy of women.

These two articles imply that with women, you have to "prime the pump" in some way. Sort of like seduction or foreplay. An image, in and of itself, will not be sufficient.

Brett Steenbarger, Ph.D. said...

Thanks, Dr. Hong, for the background!