The Hour Between Dog and Wolf: Risk Taking, Gut Feelings and the Biology of Boom and Bust by John Coates

John Coates’ “The Hour Between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust” is a groundbreaking look at basic neurological and hormonal functions, and how they relate to investment risk-taking. Drawing on his study of the markets and his own experience as a derivatives trader, Coates presents the science behind risk-taking desire and aversion, and how they impact decision making when it comes to investing.

The title of the book, “The Hour Between Dog and Wolf,” refers to a 17th-century French proverb – at day’s end, traders and investors often experience a surge of enthusiasm and risk-taking, particularly when the markets seem to favor their decisions. This provocative title speaks to the essential thesis of Coates’ book – that in this hour, “winners are made and losers are broken.”

Taking a decidedly biological approach to the market, Coates argues that the human body creates an “investment cycle”. As traders experience success, their brains release dopamine, creating a cycle of euphoria and risk-taking behavior. Triggered by a surge in testosterone, this can lead to greater and greater risk-taking and a more extreme cycle of reward and disappointment as the markets and trades fluctuate.

In the book, Coates delves further into the biology of boom and bust cycles, looking at the effect of testosterone and cortisol on traders. According to Coates, losing streaks create an alternate hormonal cycle, with stress hormones like cortisol flooding a trader’s system and creating feelings of anxiety. When this cycle spirals out of control, it can lead to catastrophic financial losses, as traders become unable to make good decisions due to the cyclical effects of their hormones.

Ultimately, Coates’ book “The Hour Between Dog and Wolf” provides valuable insight into the neurological and hormonal effects of trading. He emphasizes the need for traders to take proper care of their bodies during trading cycles in order to ensure the best chances of success. By understanding the power of body chemistry and learning to recognize the peaks and troughs of the investment cycle, traders can avoid the pitfalls of overenthusiastic risk-taking and maximize their chances for success.

In addition to the scientific insights Coates provides, “The Hour Between Dog and Wolf” also provides practical advice for improving a trader’s mindset. Stressing the importance of relaxation and self-awareness, Coates advocates for a more balanced approach to risk-taking, and reminds readers that “life is too short to risk it all on every bet”. Ultimately, he cautions against relying too heavily on gut instinct and intuition, and encourages traders to base their decisions on facts and evidence.

By providing a thorough exploration of the biological forces that drive risk-taking and fearless investing, John Coates’ “The Hour Between Dog and Wolf: Risk Taking, Gut Feelings, and the Biology of Boom and Bust” offers an enlightening look into the world of market trading. By presenting scientific evidence, practical advice, and an honest look at the short- and long-term effects of risk-taking decisions, Coates provides readers with an invaluable guide to making smart and informed decisions when it comes to investing.