Stockbrokers are more reckless and manipulative than diagnosed psychopaths, says a study conducted by researchers at a Swiss University. According to Psychologists at St Gallen’s and a Lead Administrator at a prison with psychotic criminals, Money Market Traders could easily be put in a mental asylum.

You may have an agent handling all the technical issues surrounding your financial investments. You may even have shares in Companies listed on the Nairobi Securities Exchange (NSE). What you don’t know is, your broker may be stark raving mad. If you've heard of high risk investments, well know now that sometimes the gamble is actually worse than it appears to be.

When Safaricom Limited sold some of its shares a few years ago, people jumped at the chance to own a piece of Kenya’s biggest mobile phone service provider. After all  it was a telecommunications Company with the potential for further growth and expansion. Brokers had buyers lined up and itching for a piece of the action. Needless to say, the numbers were somewhat disappointing.

None of the traders warned the public of the risks involved and even if they did, they weren't loud enough. Nevertheless, brokers still got their commission and Safaricom share prices continued to trade with sluggish precision.

One Man’s Trash

Your Stockbroker could also be looking for the best deals on the market. But those deals may not be the best ones for you. They want to make the most money with the least possible effort. Some of them are even willing to cheat, steal and jump through other illegal hoops to do it.

Others are looking for shortcuts which cost the client more than initially anticipated. When it comes to the middle man, it’s all about money verses services tendered. If there’s a deal that can get them a reasonable commission, then they will most likely take it. But if they have to go an extra mile to save you a few thousand shillings at the expense of their own initiative, then the tides may change.

Brokers want money. No one really wants to do you a big favour for a small cut. If the profit margins are too low, then a broker may not be willing to get you the best deal out there. But if there is a deal that promises large returns at the risk of incurring major losses, some traders may actually lay down their chips and start placing bets at your expense.

Selfish Thrill-Seekers

The study's co-authors, Forensic Scientist, Pascal Scherrer and Lead Administrator at Pöschwies prison in Switzerland, Thomas Noll note that traders are selfish thrill-seekers with a knack for dangerous investments.

[caption id="attachment_27033" align="alignleft" width="300"] "It's not about money. It's about sending a message" - Heath Ledger as The Joker, buring a large pile of cash[/caption]

They argue that Stockbrokers, among other investment agents, have no real incentive to look for the best possible deals out there. They are not always inclined to go the extra mile for their clients simply because their own profit margins may seem too low.

The researchers studied 28 professional traders who took part in computer simulations and intelligence tests.

Based on the bankers’ egotism and their readiness to cooperate, the researchers confirmed that their behaviour resembled that of psychotic criminals. In fact, the results of the study exceeded their expectations. All of the 28 equity, derivative and forex traders displayed what doctors would medically term as psychosis.

A Banking and Finance report by German-based publication, Der Spiegel has even described stockbrokers as people with an appetite for destruction. Noll noted that the Stockbrokers who were studied were more willing to take risks than a group of certified psychopaths who took the same test.

Der Spiegel mentioned that he was shocked by the fact that the bankers weren't aiming for higher winnings than their comparison group. They were more interested in achieving a competitive advantage.

Instead of making calculated and business-like moves to achieve the highest profit they put more effort into getting more than their opponents.

[caption id="attachment_27024" align="alignright" width="322"] Rogue Trader, Kweku Adoboli Getting Arrested[/caption]

The same thing happened with 32-year old Ghanaian-born, Swiss banker, Kweku Adoboli who squandered USD 2.3 billion (KES 197.8 billion) in an unauthorized investment scheme. Instead of using the safe and legal channels at his disposal, he chose to apply unscrupulous channels.

Soon thereafter, Adoboli, who used to work for the Swiss bank UBS Global Synthetic Equities Trading team in London, attained the infamous title of the 2011 UBS Rogue Trader.

The loss uncovered by UBS is almost exactly the same amount the bank was trying to save by cutting 3,500 jobs from its worldwide empire. The bank has since faced a fine of over KES 4.14 billion from the City Watchdog while Adoboli will spend 7 years in prison.

Yet another Market Analyst by the name of Alessio Rastani admitted that some traders  are not worried about the ongoing global economic crisis. He said that as long as they were making money despite the abysmal state of affairs, there was nothing to worry about.

“Personally, I've been dreaming of this moment for three years,” said Rastani. “I go to bed every night and I dream of another recession.”

Two Sides to the Coin

Ironically, the same psychosis that prompts bankers to make seemingly irrational decisions can be geared towards financial success. In 2004, a study carried out by a Scottish University concluded that, with the right coaching, psychopaths can become successful stockbrokers instead of serial killers.

The study was done by a health Correspondent from the Psychological Society and states that psychopaths "need careers where there is a lot of action." The research argues that they would never be happy doing a mundane job. They would be better suited for high- octane and risk-centered business environments. So the next time you decide to hire a professional stock, forex or equities trader, take a long hard look at their track record. And even when you are in doubt, know that the craziest people can sometimes make the best financial decisions.