Yesterday's rash of stories about traders seeking professional help from psychologists brought to mind a story from The Money Game, the classic 1967 book on Wall Street written by George Goodman (who wrote under the pen-name Adam Smith and later went on to host "Adam Smith's Money World").
After the jump, we bring you a brief excerpt from The Money Game. It's basically the story of what happens when an interest in mental health meets an interest in financial health. Guess which wins...
Jack Dreyfus, founder of the Dreyfus Fund, also thought of the value of studying unconscious motives in the marketplace. Dreyfus built a fund with an outstanding record, bringing the sensibilities of a superb bridge player—which he is—to the market. For many years, Dreyfus had had an emotional rapport with a particular psychiatrist, and finally he decided that the psychiatrist should have an office at the Dreyfus Fund, just to see whether managers were functioning at peak efficiency.
A portfolio manager of my acquaintance was called in one day. All prepared, he loosened his tie, took off his jacket, and lay down on the couch. The psychiatrist sat in the psychiatrist's chair, and the portfolio waited for the probing question.
"Polaroid," said the psychiatrist.
"Polaroid," repeated the portfolio manager.
"It's awfully high here, don't you think?" suggested the psychiatrist.
The portfolio manager mulled over the possible unconscious implications of this.
"I have a lot of Polaroid, personally," said the psychiatrist. "It's come up awfully fast. Should I hold it?"
The portfolio manager sat up. "It's going to be alright," he said, in soothing tones. "It's going to work out just fine."
The psychiatrist slid into a more relaxed position. "I worry about Polaroid," he confessed.
"Let's examine this," said the portfolio manager, "and see why you're so worried. I think I can be of some help…"