3 Things I Learned from “The Hour Between Dog and Wolf.”

John Coates — Wall Street trader turned neuroscientist — wrote the book The Hour Between Dog and Wolf: How Risk Taking Transforms Us, Body and Mind about the physiologic reactions that take place on a trading floor.

It’s a great mix of biology and board rooms, taxonomies and trading floors. Don’t let the subject scare, it was an easy read for a layman like me. Here are three things I learned.

# 1. If some (novelty) is good, more (is not) better.

The classic axiom is proved true again in Coates’ book. He writes that novelty, uncertainty, excitement, thrill, and complexity are all good to a certain degree. These are the moments that we live for.

We live for them because of the rush of hormones we get. Our bodies have evolved to release testosterone, cortisol, dopamine, and many others so that our bodies can act in the moment.

But not for long moments. If the uncertainty drags on, what excited us now makes us anxious. That thrill is gone and those same chemicals that helped, now hurt. Incidences of acute challenge are very good for us, chronic ones poison.

#2. We should use conscious and pre-attentive thinking to solve problems.

This book makes the case how awesome our bodies are. The number of systems that operate without conscious thought are incredible. Just thermoregulation, a comfortable 98.6 internal temperature, is complex and expensive. That we evolved this single feature is incredible.

Another part of awesome evolution is the pre-attentive thinking we do. It’s not really thinking so much as processing, and we shouldn’t be blind to it. Coates says that when he was a trader, people would marvel at an older trader who consistently made money without the latest technology and algorithms. He didn’t need them, he he had something much better Coates argues. Deep within us is a great processing and judgement device that we should listen to.

#3 It’s hard to stop a cocaine train.

It’s hard, writes Coates, to stop the party vibe a bull market brings. When people make money by taking risks it seems easy. One trader gets in, then another, then another. Eventually it reaches critical mass and things get nuclear.

People get more aggressive and start trading not on numbers but on things like hubris and chemicals like testosterone. These traders — almost always males — make more and more money, and create a positive feedback loop. That loop builds until it crashes.

It’s hard to slow all this down because people always want more — through behavioral biases (playing with house money: see Richard Thaler for more) and chemical inflows (testosterone encourages more risk).


The book was good and pairs well with When Genius Failed: The Rise and Fall of Long Term Capital Management. It was almost like Coates was the resident physician, taking readings of the LTCM traders from 1994–1998. If you liked this post you may like my longer posts at The Waiter’s Pad where I break down interviews from people like Mark Cuban, Stanley McChrystal, and Seth Godin. You can also subscribe to my montly email list where I share books I read. Sign up or check out the archives here.

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