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A researcher at Upland Downs University in England is using evolutionary psychology to give stock traders and hedge fund managers an edge. The researcher, Richard Thadwicke, a lecturer in psychology at the school, performed a series of studies showing that stock traders perform significantly better in the hours immediately following orgasm.

The study followed a group of twenty-four male day traders. Half were asked to masturbate at randomly determined intervals during the course of the day; the remainder were required to avoid sexual release until after the closing bell.

The result? The men in the release group were more likely during the two-hour window after orgasm to buy stocks that later appreciated in value, and also avoided making as many neutral or losing trades in that period. Their performance in these time slots was significantly better than their performance before and after, and also better than the control group’s.

“The reason is obvious when you think about it,” says Thadwicke. “We are driven in our daily life far more than we ever acknowledge or understand by a small set of core urges—and these are urges that were set long ago in the evolutionary process, when we were in the jungle, so reproduction, food, survival.”

Thadwicke says these urges often lead people astray in the modern, concrete jungle. For example, it is well-documented in the finance literature that people pay too much for popular stocks that are already overvalued. In “All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors,” Brad M. Barber of the University of California, Davis, and Terrance Odean of the University of California, Berkeley, found that investors tend to buy stocks that are in the news a lot; in other words, popular stocks. “An overvalued stock is like an attractive mate,” says Thadwicke. [Read more…]