Recent study found people are more prone to take financial chances when they’re hungry and less willing to take risk after they’ve eaten.
…or one hour after a 2,000-calorie same meal.The study found risk aversion to be at its highest immediately after consuming the big meal, though the results varied depending on hormonal changes and body types.One market pro found parallels between the real world of trading and the study on appetite and risk-taking.Nicholas Colas, chief strategist at BNY ConvergEx Group in New York, said such behavioral economics do help to explain behavior in the financial markets.”When I worked at a large (Connecticut)-based hedge fund a few years ago, I always wondered why the company kitchen was so well stocked with chips, sodas and other snacks. At my next trading gig, the company founder insisted on having lunch, as a group, every day at exactly noon,” Colas wrote Monday in an analysis. “Whether they knew it or not, both fund managers knew that staying well fed is actually a risk management tool, at least if the BPS study is any guide. Hungry traders are, well, riskier traders.”The nascent discipline has its limits,…
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Hungry Traders: Greater Appetite for Financial Risk
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