from cnbc: After years of underperformance, researchers may have discovered what's plaguing the hedge-fund industry: too much testosterone. Hedge-fund managers with high testosterone underperform those with low testosterone by 5.8 percent each year, according to a study conducted by University of Central Florida and Singapore Management University. The researchers used software to measure the facial width-to-height ratio — proven to be a proxy for testosterone levels — of more than 3,000 hedge-fund managers. After controlling for variables such as risk and market environment, the researchers found that not only do funds of higher-testosterone managers produce lower returns, but those managers also have a greater propensity to be terminated. Gradyreese | Getty Images High-testosterone managers "trade more frequently, have a stronger preference for lottery-like stocks and are more likely to succumb to the disposition effect," the report said, referring to the tendency of investors to sell assets at higher prices and holding onto those that have dropped in value. The researchers also found that hedge-fund investors — specifically, hedge fund-of-funds — select managers based on their own testosterone levels. In other words, higher testosterone fund-of-hedge funds are more likely to invest in higher-testosterone managers, while the reverse is true for lower testosterone. The results of the study may have implications for hedge-fund performance as well as hedge-fund culture, which tends to prize aggression, competitiveness and drive. If this study is true, perhaps the prevalence of alpha males is what's eroding alpha. Hedge funds have largely underperformed the S&P 500 during the current bull market. And they've continued to underperform even as the market has gotten more volatile. In aggregate, hedge funds have returned 0.14 percent this year, according to Hedge Fund Research. That compares with a 1.3 percent gain for the S&P 500.
Which edge are those guys talking about? Pushing the buy and sell execution trader button? Most everything else has been taken over by algorithms at banks or buy side firms when it comes trading. Fake it if you can't make it.
Sounds like a bullshit study. So basically, they have software that looks at photos of people who run hedge-funds and tries to determine their testosterone levels based on what their face looks like. As if testosterone levels don't decrease with age and age has a lot to do with experience. Show me any study and I can probably find other factors that account for the conclusion. If that were true, then all hedge funds would be run by women. I'm curious though, my face is perhaps a bit more narrow than wide. Does that indicator high or low testosterone?
It would indicate low Test. Researchers got quite a bit more information from those ratios, although after reading only half the article, all the behaviors seem to go hand in hand with higher testosterone levels : http://www.iflscience.com/plants-and-animals/friend-or-foe-what-shape-your-face-says-about-you/
A $2 Billion AUM hedge fund earning $40 Million annual guaranteed management fees but having only 6 analysts to support the "high testosterone" manager is the main problem. Even if these analysts make $300K (which I doubt, figure is more like $150K plus bonus), it still leaves a good $38M to throw around into more research. Data absorption, churning, comprehension, interpretation, manipulation, modification etc. etc. is the challenge and it has to be met both by human and machine support. A manager with "bull sized testicles" running a daily screen and throwing out 80% of stocks that do not meet P/E or P/B or sales growth or earnings growth or similar criteria...........would not help in giving good performance IMHO. Care for animals for free..........you can click several times a day http://thehungersite.greatergood.com/clickToGive/ars/home?1
the article that you posted just talked about the the immediate physiological response one one's body from hormone). it didn't talk about the effect of hormone on one's mental and psychological state? would hormone make someone a better trader like the article above talked about on the long term basis? would hormone make trader more aggressive or emotional or take on more riskier position? evidently, hormone would make one to perform physical tasks better or else Russia wouldn't have used performance enhancement drugs on its athletes? i think the study above makes sense... also, it's our emotional response to the study (feeling being profiled perhaps ), but data never lies (of course unless it's manipulated). Do traders generally perform better on Monday?