Adrenaline Fools Rush In

Drugs can be bad for your financial health, suggests Andrew Leci. Even if

they’re naturally produced. There can be billions on the line.

GAMBLING CAN BE addictive. So too can stock trading. There are quite a few common denominators. Both can be fuelled by adrenaline, and both can be very dangerous.

While investment experts will assert that the best traders and portfolio managers will have a long-term strategy and try to make sensible decisions based on sound research and instincts honed by experience, it doesn’t sound like a lot of fun compared to ‘having a punt’ – a phrase often used in the gambling arena – and seeing where the chips may fall after the shake-out. Yes, I am mixing my metaphors as much as possible, for reasons that should already have become obvious.

When traders win big, they achieve the same kind of adrenaline rush as a gambler who does the same, and as we all know, winning big often means taking the most risk. There are metrics in terms of the ‘riskreward ratio’ that economists and financial analysts constantly refer to, but these tend to be either ignored or overlooked when the process has become all about getting an adrenaline-driven fix. While risk-taking in itself is part of what makes us human, there are limits. Or at least there should be.

One of my favourite television shows in recent times has been Billions, a drama series produced by Showtime that Vivaldi would have been proud of.

It’s already had four seasons. Apologies. I don’t want to give too much away for those who haven’t been fortunate enough to watch it yet – it’s terribly good; thoughtful, compelling, well-acted and eruditely written – but the two main protagonists are a billionaire hedge fund manager Bobby ‘Axe’ Axelrod (even his name is aggressive) and US attorney Charles ‘Chuck’ Rhoades (not quite as potentially violent a name, but still not warm and fuzzy).

They feud, they fight and generally get on each other’s nerves, making and stating their avowed intention to destroy the other, respectively – certainly not respectfully. ‘Chuck’ and ‘Axe’ going at it like testosterone-infused rutting animals… What’s not to love?

The point is that for Axe, making money is not nearly as important as the way in which it is made. He already has more money than he can spend in a couple of lifetimes, and doesn’t hesitate for a moment when ordering two Mercedes sports cars after a test drive

(one for him, one for a friend) which he may or may not do in season four. As I said, I don’t want to give too much away.

Axe gets his kicks from bold moves into unconventional markets and putting together complex strategies that invariably screw over something, or someone else. More often than not, he’s left totting up the cash and smelling the roses, while others are left with their mouths agape, contemplating ways in which to extricate themselves from the fertiliser. That’s what gives him his adrenaline rush. Not counting the cost, but taking a perverse pleasure from the chaos he wreaks and the collateral damage he leaves behind.

Axe’s strategies are almost invariably high risk, but that risk is mitigated by the fact that not only is he a financial savant, but also because he skates through the lines of legality – on ice thicker than it might be, bearing in mind that he has all the relevant intel (frequently from sources of dubious propriety). For Axe, the fun is in the challenges, forays and skirmishes. The risks get his juices flowing; the battles make him positively salivate.

It’s Chuck’s job – at least in the show’s first two seasons – to clip Axe’s wings, and hold him to account for all his assumed wrongdoings. For Chuck it is also about the confrontation, and his adrenaline gets pumping at the prospect of bringing Axe down and making him pay for his evil ways. I won’t reveal who wins, if indeed either of the two does, but the antagonism between the two alpha males is a series of sights to behold, as it is to see traders on trading floors trying to best each other in pursuit of their next mega-bonus, sometimes playing a straight bat to build a long innings (it’s a cricket analogy, go with it) but as often as not taking the kind of risks that the attendant adrenaline rush can make addictive.

While traders are gambolling through their gambles, it’s often the lot of small investors to pay the price and count the cost, whether they be potential pension fund recipients or individuals who trade their own book – the Internet has made online trading an absolute breeze for anyone savvy enough to turn on a computer and gain access to a series of adrenalinefuelled rushes when the shirt on their back is in jeopardy. The quest will always be the next big deal; the pay-off will almost always be the euphoric feeling of making (sometimes easy) money.

Unlike Billions, however, actual trading is not a television show and there can be unpleasant consequences. It can be problematic when it’s a chemical secretion that’s driving the narrative and not the kind of common, practical sense that all our financial advisers assure us is being deployed. Just say “no” to adrenaline when making decisions that could affect your financial health (and that of those around you) and avoid having to try to scramble up the slippery slope of addiction when you’re already three quarters of the way down it.

This has been a public (mental) health initiative, brought to you by Robb Report.

The quest will always be the next big deal; the pay-off will almost always be the euphoric

feeling of making (sometimes easy) money.