Testosterone Really Does Mess With the Stock Market

Wall Street is one of the most gendered professional spaces out there, but its overwhelming maleness may spell trouble for the whole economy. Far from being feminist buzzkill alarmism, new research shows that men with heightened levels of testosterone are more prone to risky and damaging investment behavior.

Researchers from four different institutions came together to study the biology of market fluctuations. Turns out it's not so far-fetched: In one double-blind experiment, 140 young male participants were exposed to either a placebo or doses of testosterone. They were then asked to do some Wall Street-typical daily functions, like bid on stocks and sell assets for profits.

The results were striking: The men who received testosterone were more likely to misprice stocks, drive price bubbles, warp market behavior, and misjudge stock values over a period of time. They were also more likely to pursue "buy high to sell higher" strategies, rather than the more measured "buy low, sell high" method.

Hormones, in other words, can present very real financial risks, and it's not at all related to premenstrual women, per the ugly stereotypes. "Based on our findings, professional traders, investment advisories, and hedge funds should limit the risk taken by young male traders," said Western University co-author Amos Nadler in a press release.

Women are already drastically underrepresented in high finance, and female-identifying investors have to operate in a world that doesn't consider their particular life needs. As for their male colleagues and fellow travelers, Nadler has some advice: "Perhaps the simplest recommendation is to implement 'cool down' periods to interrupt exceptionally positive feedback cycles and return the focus to assets' fundamental valuations to reduce the possibility of biased decision-making."