Wall Street Traders Have Lost Much of Their Swagger
A New York Fed study finds that due to the pandemic, the trading community no longer has the psychic strength to make fearless bets. This may fundamentally alter markets as we know them.
Wall Street is a more cautious place.
Photographer: Jamie Squire/Getty Images
In December, a team of researchers from the Federal Reserve Bank of New York, the University of Southern California and University College London published a study of what cognitive skills make successful traders. They’re back with a look at non-cognitive skills such as agreeableness and conscientiousness. This time their focus is not on what distinguishes traders from everyone else, but how personalities of traders and non-traders changed due to the pandemic.
The findings suggest a trading environment that is becoming less bold and more cautious with implications for the reaction function of financial markets that is very different than what we have become accustomed to.