Why learn about your genes?
Some investors love taking risk - they love looking for a hot stock or market. Other investors are terrified of risk-taking – government bonds can appear too risky to them. Studies show that many investors have a genetic predisposition underlying their financial risk taking. And it stands to reason that gaining insight into their genetic endowment can help them identify, prepare for, and work around repetitive or problematic behaviors.
Beyond risk-taking propensity, genotyping may be able to identify susceptibilities to common investment mistakes (also called “biases”). Studies have demonstrated that some genes correlate with predisposition to “framing effects” in financial decision making. For example, when in a losing investment, are you likely to cope with the loss by avoiding the pain of selling while hoping for "a comeback"? This behavior is one-half of a bias called the "disposition effect."
Neurotransmitters are chemical messengers including serotonin, dopamine, and norepinephrine, and their actions underlie our experiences of feeling, thinking, and deciding. The genes that influence our financial risk taking and biases underlie neurotransmission. Neurotransmitter synthesis, transport, reuptake, and metabolism and receptor expression are all governed by genetic transcription. The ten neurotransmitter genes that have been found in scientific studies to have the most influence over financial decisions are analyzed by the MarketPsych Gene Screen.
Here’s how it works
We are currently enrolling groups of financial professionals and interested individuals into our Gene Screen study. The cost is $995 for a genetic screening of 10 predetermined genes and a 45-minute counseling session regarding the results. When we reach a critical mass of ten individuals enrolled, then we send you a saliva sample collection kit with a pre-paid, addressed envelope. Once your sample is received by the lab, your results will be available in approximately two weeks. While waiting for your results, we recommend you take our free investing personality test. Richard L. Peterson M.D. will review your results with you in a 45 minute telephone counseling session. Richard Friesen, MarketPsych’s Director of Trader Training, will be available with personalized coaching packages for clients who would like to pursue additional coaching or discussion.
Reserving your gene screen
To sign up, please email rpeterson[at]marketpsych.com with an email title of "Gene Screen". Dr. Peterson will contact you to answer questions and to discuss the procedure and timeline of the study.
Please note: our study analyzes 10 genes related to financial behavior. It cannot give you results related to your physical health, mental illness, or longetivity. An analysis of your entire genome packaged with medical recommendations currently costs about $50,000 via a consumer genomics company such as 23andme.com.
What is the evidence that my genes matter?
The scientific evidence in the following studies is summarized following the citation. The results of these studies underlies the MarketPsych Gene Screen.
1. Kuhnen CM, Chiao JY (2009) Genetic Determinants of Financial Risk Taking. PLoS ONE 4(2): e4362. doi:10.1371/journal.pone.0004362.
“Here we show that variants of two genes that regulate dopamine and serotonin neurotransmission and have been previously linked to emotional behavior, anxiety and addiction (5-HTTLPR and DRD4) are significant determinants of risk taking in investment decisions. We find that the 5-HTTLPR s/s allele carriers take 28% less risk than those carrying the s/l or l/l alleles of the gene. DRD4 7-repeat allele carriers take 25% more risk than individuals without the 7-repeat allele.”
2. Dreber et al. (2009, Evolution and Human Behavior). These authors found that “The 7R polymorphism in the dopamine receptor D4 gene (DRD4) is associated with financial risk taking in men,” and 7R+ men are significantly more risk loving than 7R− men. This polymorphism accounts for roughly 20% of the heritable variation in financial risk taking.
3. Crisan et al. (2009, SCAN): “Genetic contributions of the serotonin transporter to social learning of fear and economic decision making.” The authors find that in comparison to the homozygotes for the long (l) version of 5-HTTLPR, the carriers of the short (s) version display reduced financial risk taking and increased susceptibility to framing in economic decision making.
4. Roiser et al. (2009, Journal of Neuroscience): “A Genetically Mediated Bias in Decision Making Driven by Failure of Amygdala Control.” The authors find that individuals homozygous for the short (s) allele of the 5-HTTLPR are be more susceptible to framing effects (gamble in the loss frame, take certain payoff in the gain frame).
5. Zhong et al. (2009, Proceedings of the Royal Society B): “A neurochemical approach to valuation sensitivity over gains and losses.” In this study subjects with the 9-repeat allele of DAT1 (lower DA tone) are more risk-tolerant over gains than subjects with the 10-repeat allele. Subjects with the 10-repeat allele of STin2 (higher 5HT tone) are more risk-tolerant over losses than subjects with the 12-repeat allele.
6. Cesarini et al. (2009, Journal of Finance): “Genetic Variation in Financial Decision Making." The authors find that approximately 25% of individual variation in portfolio risk is due to genetic variation.
7. Barnea, Cronqvist, Siegel (2009, Working Paper): “Nature or Nurture: What Determines Investor Behavior?” The authors find that up to 45 percent of the variation in stock market participation, asset allocation, and portfolio risk choices is explained by a genetic component. The family environment has an effect on young individuals' financial behavior, but disappears after the individual acquires their own experience.
Who we are
Richard L. Peterson M.D. is co-founder of MarketPsych LLC and a California-licensed physician. He is also a portfolio manager at MarketPsy Capital LLC and is Board-certified in psychiatry by the American Board of Psychiatry and Neurology. Please note that Dr. Peterson is not a certified genetic counselor.
Richard Friesen is MarketPsych’s Director of Trader Training. He is a former trader who founded and sold a successful options specialist firm as well as one of the first electronic market making firms - ePit Systems (sold to Hitachi). He was previously a seat-holder on the CME and the Pacific Stock Exchange. He holds a Master’s degree in Psychology.
Disclaimers
We have a number of legal waivers, consent forms, and disclaimers prepared for those interested in this study. We are committed to protecting your privacy, and our privacy policy will be sent with our other disclaimers to interested parties. Please keep in mind that genotyping cannot tell you "who you are" or define your direction in life, but rather it should stimulate thought and further exploration.
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