The Hour Between Dog and Wolf Book Review: Inside the Mind of a Wall Street Tycoon


Grade: A- / A

In The Hour Between Dog and Wolf, a former Deutsche Bank derivatives trader-turned-world-class, University of Cambridge neuroscientist provides us with candid, highly-detailed portraiture of Wall Street risk-taking from a unique and unconventional perspective: that of biology. With consistently insightful, truly surprising, and at times unsettling anecdotes, observations, analyses, and conclusions, Dr. John Coates uniquely humanizes the game of finance and its players—i.e., people, mostly young men, to whom we entrust considerable command over … well … to put it bluntly, practically the whole friggin’ economy. In addition to introducing readers to the relatively new—and controversial—fields of behavioral economics and behavioral finance, Coates clearly examines the psychological and indeed physiological happenings within the anatomy of a hot-shot trader and his hot-shot gambles; and he does it with tempered, purposeful prose (that reads and works well), fascinating digressions (for the most part), and creative devices that illustrate his points (for instance, placing readers in the shoes of a treasuries trader and taking us step-by-step through a typically high-risk, everyday scenario: short-selling treasury bonds with a $750 million pension fund on the line—all by himself).

Coates reveals and describes the anxiety a trader feels when he jumps off a cliff on a hunch, no matter how educated that hunch may be; the reflexes, stamina, thick skin, and even physical strength he needs to run a trading desk or wrestle on the trading floor; the euphoria he feels when his hunch pays off, yielding millions of dollars and fat bonuses; the delusion of grandeur and invincibility through which he views himself after a testosterone-induced winning streak; and, of course, the crushing, demoralizing blow he feels when the bubble suddenly bursts, his winning streak comes to an screeching halt, and his overreaching, arrogant betting slaps him on the face with the loss of all those millions. It’s one of those enlightening reads that makes me nod, smile, ruminate, cringe, and shake my head every other sentence. How can you not react to remarks like, “the financial system balances precariously on the mental health of risk-takers”?

Having graduated from NYU disgruntled with the impracticality and soullessness of my economics major (and, by extension, NYU’s undergraduate economics department, which is supposed to be among the best in the world), The Hour offers people like me a reality check to typical economic thinking. It hadn’t been until I reached my senior year and began to delve into my sociology minor, or electives like “Ethics & Economics” and “Developmental Economics,” when I finally got something useful and realistic out of my major—something about us. I’ll always believe that neoclassical economics will never be perfect because it insists on assuming we’re all “rational” (whatever that means) when it’s precisely our irrationality that both completes and defines us as homo sapiens.

Should foundational economic curricula incorporate more behavioral economics courses, and perhaps even require a sociology minor?

I appreciate this “revisionist economics” title (unlike all the traditional fluff I was fed during my underclassman days) because of the realistic things it reveals to us about us. A Wall Street “fat cat” is no different from everyone else in that he’s a person; like the person who took pictures of his erection through his boxers and posted them on Twitter—wisely during his tenure as a legislator at the highest level of government; or the person who pissed off an entire country and forever removed himself from the conversation of truly great players when he abandoned his team and ran away to South Beach like a loser; or the person who really, really, really miscast Bella Swan and Snow White, and utterly ruined Kristen Stewart’s adult career before it had really even started; or the person who overcooked my steak, or cut me off on the freeway, or added whipped cream to my frappuccino even when I specifically told him not to.

The takeaway of The Hour is the way it reminds us convincingly—via science, evolution, anthropology, and philosophy—how healthy it is to reflect on who we are and what we’re made of. It’s healthy to be wary of the fact that we’re all at the mercy of our own internal chemical reactions, natural impulses that may or may not be rational—that should be embraced, certainly, but monitored and checked all the same if indeed we care to maximize the output, revenue, and profit of our lives.

And finally, Coates also reminds us that we’re all the same: that we’re susceptible to our imperfections, and that mustn’t get ahead of ourselves and be victims of hubris (unless, of course, you want to lose all your money—or if you want someone else to lose all your money for you).

With the exception of some pop science digressions spanning 30 to 40 pages in the middle of the first 100, which comprise jarring digressions that weren’t tied into the main point of his book as seamlessly as they could’ve been, Dr. Coates has written us a really brilliant book.

Excerpt from The Hour Between Dog and Wolf 

When traders enjoy an extended winning streak, they experience a high that is powerfully narcotic. This feeling, as overwhelming as passionate desire or wall-banging anger, is very difficult to control. Any trader knows the feeling, and we all fear its consequences. Under its influence, we tend to feel invincible, and to put on such stupid trades, in such large size, that we end up losing more money on them than we made on the winning streak that kindled this feeling of omnipotence in the first place. It has to be understood that traders on a roll are traders under the influence of a drug that has the power to transform them into different people. - Coates