Maria Gonzalez Blog
Mindful Leadership

Stress Impacts Everything…Including the Markets!

Anyone who has experienced stress in their lives (and who hasn’t?) knows the impact it can have on the body and the mind.   At minimum, we know that cortisol levels increase and with that, a general state of uneasiness and unwellness.  We also know that if stress is sustained for long periods of time, it impacts overall health, as well as, performance.  And as a leader, you know that your stress can impact your team and the entire organization.

What we didn’t know, until now, is the impact that traders’ stress levels have on the financial markets.  A recent article by Reuters UK describes a study of City of London traders and of the effect of cortisol on behaviour.  The research was led by Dr John Coates, a former Goldman Sachs and Deutsche Bank derivatives trader, turned neuroscientist.  What they found is that high levels of the stress level cortisol can induce “risk aversion”.

As the article states, “the findings, turns on its head the assumption that traders’ appetite for risk-taking remains constant throughout market up and downs, and suggests stress could in fact make them more cautious, exacerbating financial crises, just at a time when risk-taking is needed to support crashing markets.”

According to Coates, now a researcher in neuroscience and finance at Cambridge University, “Any trader knows that their body is taken on a roller coaster ride by the markets. What we haven’t known until this study was that these physiological changes – the sub-clinical levels of stress of which we are only dimly aware – are actually altering our ability to take risks.”

I have written at length in both previous blogs, as well as, in Mindful Leadership, about the impact of physical sensations in the body, that drive behaviour.  I can’t overemphasize the importance of being aware moment by moment of these sensations.  By being aware of the sensations you are more likely to know when you are becoming stressed.  These can become early warning signals that can help you put a strategy in play to mitigate unwanted behaviour that can spiral.  And if you’ve missed the cues, it is not too late!  Awareness at any point will enable you to catch yourself and get back on course.

One of the easiest strategies to reduce and manage stress is to work with body relaxation and relaxing breath meditation.  Practicing this regularly will cause you to become increasingly aware of your body and any tension you may hold, and thereby enable you to release the tension.  This will bring about physiological benefits as well as, enable you to be a more effective.  I have created a Mindful Leadership App for smartphones, androids and tablets that can help you effectively reduce and manage stress with some simple Mindfulness techniques.

Read the complete Reuters UK article