Suffering from... The Coolidge effect

Hooked on chancing everything on risky investments? Learn from the former US President...

by Helen Kirwan-Taylor
Last Updated: 19 Oct 2010

Tired of putting all your eggs in the same basket? Former US president Calvin Coolidge was touring a chicken farm with his wife. The foreman noted the sexual prowess of his prize rooster. 'Did you know,' he said, 'a rooster can provide his services all day without stop?' 'Ah,' said Mrs Coolidge, 'you must tell that to my husband.' President Coolidge interrupted: 'And with the same partner?' 'Oh no,' said the foreman, 'always with different chickens.' To which Coolidge replied: 'You must tell that to my wife.'

Traders have been shown to have a similar biological response when they gamble on a new and unknown commodity. The thinking is that taking multiple financial risks is better than managing the same boring old investments, so to maximise your return you have to punt on as many risky things as possible - a logic which may well be what got our economy into trouble. (What were the Icelandic bankers doing if not acting like roosters?) Sufferers get bored quickly and love taking risks (of both the financial and sexual kind). Like roosters, they strut a lot.

Managers have long established the Coolidge effect can either make them rich or land them in jail. The safer option is the female version of the disorder: stick to the partner (or investment) you know and look after him loyally.

helen@kirwantaylor.com

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