Bipolar Expeditions (37 page)

CHAPTER NINE

 

Manic Markets

As a physician I know that we cannot distinguish sharply between normality and abnormality. The abnormal is often only an enhancement of the normal. It is also known that both normality and abnormality often have identical social effects.

—Ludwig Fleck,
Genesis and Development of a Scientific Fact

I
n the world of financial markets, commentators on the economy often speak of alternation between extreme highs and lows as a disease, and sometimes describe it as a form of “manic depression.” But in practice, for the adept, such volatility can act as a resource, because the volatility provides profit-taking possibilities for those who can anticipate when the market will shift either way. Mania's interstitial position between mood (floating, changeable feelings in the psyche) and motivation (organized, goal-directed behavior) is crucial for understanding why the “manic” artist or CEO seems to function well in the corporate world of the twentyfirst century, but a “manic market” is a harbinger of disaster.

Links between Individuals and Markets

Denizens of Wall Street describe a feedback loop between the state of the market and the moods of stockbrokers. A study by a clinical psychologist was reported in the financial news: “It should come as no surprise that many stockbrokers are as depressed as Internet share prices…. Retail brokers, after all, play a key role in attracting the new money that helps push up share prices. When they feel down, the volume of sales calls they make to potential investors can fall by as much as half. In essence, the market becomes sad.”
¹
The author of the study, Alden Cass, noticed a change in a former fellow student who had joined a Wall Street brokerage. “‘Over six months, this guy was starting to sound an awful lot like my patients,' Mr. Cass recalls. What he found amazed him. Predictably, many brokers showed manic symptoms [during market highs]. They slept little. They had delusions of grandeur. They took excessive risks, spending recklessly and abusing drugs. ‘They could do no wrong. That was the mindset,' says Mr. Cass.” During market lows, “Mr. Cass found that 23 percent of his sample tested positive for clinical depression compared with 7 percent of men as a whole.”

The Securities Industry Association held a seminar with Mr. Cass and colleagues from his hospital (St. Lukes-Roosevelt) to discuss depression among Wall Street brokers and how to minimize it. But during discussion, instead of asking about depression, the brokers hounded a panelist, former J. P. Morgan Chase strategist Doug Cliggott, for investment tips: “Sadly, the event may have done more harm than good … Mr. Cliggott put on his best bedside manner, then told them he expected the Nasdaq index to fall below 1,000 points by the end of the year.” The brokers' manic energy prevented them from facing the market consequences of depression.

Acting at a slightly greater distance and with more effect is the feedback loop between the moods of those in powerful positions in the business community and the stock market. Commentators fear that a plunge into a depressed mood among businessmen in corporate America and on Wall Street can lead them to take actions that will depress the stock market: “For once, that overused depression-era cliche of Franklin D. Roosevelt's—‘We have nothing to fear but fear itself'—is absolutely right. The economy is healthy, inflation non-existent, financial excess of late 1990s is over, the dollar is buoyant. Yet to judge by the thousands of job cuts since Sept. 11, American businessmen have suddenly lost their nerve. And fear is starting to spread to American consumers, who have always been more level-headed than the manicdepressives in corporate boardrooms and on Wall Street.”
²
Disordered moods are dangerously contagious.

Acting at a still greater distance, and perhaps with still greater force, are aggregate measures of moods in the general population, measures we often take to be an everyday indication of the economy's health. Calculations such as the Consumer Confidence Index result in figures we understand to stand for the mood of the mass of people as a homogenized consuming force. Consumers en masse can be confident and exuberant or anxious and depressed. Their moods affect the market, even as their moods are affected by the market. As the economist Paul Samuelson explains,

Now, millions of Americans calibrate their wealth and well-being, at least in part, by the market. The market's fall must affect the economy, social attitudes and national politics, but because the situation is new, no one can say just how much. The biggest danger is a corrosion of consumer confidence and buying, which have buoyed the economy…. Despite a hazy future, the past offers valuable lessons. A recent one is this:
mood matters.

The stock market got wildly overvalued—making its ultimate fall unavoidable—because Americans became hypnotized by silly stories of the Internet and the New Economy. There arose a senseless and stubborn optimism that justified otherwise-crazy stock prices. For a while, the optimism was self-fulfilling. Stocks rose, people spent and businesses invested. The boom began to implode once it became clear that much new corporate investment was squandered. It went into dot-coms or surplus telecom networks. Now, the danger is a swing to a stubborn and senseless pessimism. That, too, could become self-fulfilling. People dump stocks, even though prices now are more reasonable than two years ago.
³

Samuelson is concerned with moods in the U.S. economy, but others are concerned with moods on a worldwide scale. Reflecting the salience of global markets, the consulting firm RoperASW issued a “Mood of the World” survey in 2003, which was based on a study of 30,000 consumers in thirty countries.
⁴
While I could not afford to purchase the full report on my research budget, the press coverage suggested that it links optimism and confidence to consumers' proclivity to spend, and pessimism and anxiety to their reluctance to spend.
⁵
In a more jocular vein, a Web site with a sardonic tone offers the “World Mood Chart,” which allows visitors to record their moods and can tabu late thousands of individual entries a day: “Chart your personal mood against that of the world and find out if you are happier or unhappier than the planetary norm.”
⁶
Until they ran into technical difficulties, the site owners plotted the Dow Jones Industrial Average against the world mood average each day.
⁷

“Mood matters,” as Samuelson says. But do moods matter in different ways in individuals and in the market? The structures of feeling at very different levels—the individual and the stock market—seem homologous to us in some ways and different in others. To begin with the homologies, it is often said that in the market, highs depend on investors' faith in the future of the country and the economy; lows are caused by their fear of the difficult times of the past. Individual mood states are similar, as the psychiatrist Leston Havens explains, “In depression, the future is lost, and the past becomes fixed, immovable, bad, the place of irredeemable mistakes. In contrast, [in mania] the past can be lost as one soars maniacally into an unreal future.”
⁸
Evidently, in manias of both markets and individuals, time seems to speed up and in depressions time seems to slow down.
⁹
In
American Sucker,
an account of his life while investing in the market in 2000, the film critic David Denby writes,

In this boom period, you have the illusion that if you can just grab hold of the flying coattails of the New Economy investments you have the chance of getting rich very quickly. My new urgency is driven by greed; I am talking in Internet time…. Wealth, much more than ever, seems a function of quickness. The market is a kind of crass metaphysical whip that hastens the annihilation of the passing moment: there is only the next instant, and the next, rushing toward you, and in the Internet age an ideally informed person would never sleep at all but would trade the markets and chase news and rumors through the links twenty-four hours a day.
¹⁰

In the individual as in the market, highs go naturally with speed, energy, and activity, and in the kind of society we inhabit, these states often mean vigorous circulation of our chief token of value: money.

As in the market, individual manias have long been associated with putting everything possible into rapid circulation. In mania, a person will throw objects, gifts, money, or commodities in motion between people and set people in motion in relation to other people. It is as if an individual generates a miniature economic system all by herself. In her memoir,
The Man of Jasmine,
Unica Zürn described her state of mind just before she entered the mental hospital of Wittenau. In the manic phase, she made everything around her circulate rapidly; she circulated so rapidly, she lifted off the earth.

Whenever she [Zürn is speaking of herself] enters a shop to purchase something, she leaves behind far more money than her purchase costs, and departs the shop with the words: “Happy birthday and many happy returns.” Naturally the people in the shops are enchanted. And from now on she encounters one large smile wherever she goes. She also starts to walk in a completely new way: very fast and incredibly nimble. It seems to her as if she were floating two centimetres above the pavement—she's flying!
¹¹

In his memoir, published in 2002, Andy Behrman describes his manic state as “working ridiculously long hours, earning plenty of money, and spending it as quickly as I make it.”

All of this gives me an amazing sense of power and control—and tremendous elation. When I get my salary or hefty commissions, I sometimes cash the large checks so I can have the money in my hands. I love paying the bills and the tabs—especially in cash, for the attention it gets me from salespeople, waiters, and even dinner partners. I'm crazy when it comes to the sight and touch of money. When I go to the bank, I withdraw $5,000 from my account in $20 and $50 bills; the look and feel of so much money give me a jolt and a great sense of security … losing control during a shopping spree is probably the ultimate high for me now; it causes a strange sense of panic, a near blackout state. My heart races—I'm nervous, I'm frightened, I'm pressured, I'm stressed. My body becomes numb and tingly, and everything around me is spinning and I feel like I'm going to pass out, but there's a force inside driving me forward.
¹²

Similarly, money manager James J. Cramer gives elaborate descriptions of the extreme speed at which his life ran in 1997: “I've always been a manic guy. Not manic depressive, just manic. Fired up. Ready. Everybody in the business knew I was shot out of a cannon each morning.” He would be jumping out of bed at 3:30 a.m.; filing a piece online for
TheStreet.com
by 4:15 a.m.; writing another piece while being driven to New York City at 5 a.m.; trading overseas by 5:30 a.m.; appearing on
Good Morning America
at 8 a.m.; writing another piece in the car on the way back to Wall Street at 8:30 a.m.; planning investment strategy for the day at 9:15 a.m.; and trading at the opening bell of the stock market at 9:30 a.m.
¹³

Learning to Be Manic

The similarities between manic individuals and markets explains why corporations could think of deliberately cultivating manic states in their employees. As part of the research for my last book, I participated in a form of outdoor education for the members of a Fortune 500 corporation, in which 22,000 employees from upper management all the way to line workers were trained through exercises on a demanding ropes course (including some on a high wire) to become flexible, agile, and fearless. The goal of the employee training, which was subcontracted by the corporation to a small firm, was to enable workers to adjust rapidly to continuously changing conditions, especially if (or rather
when)
they were downsized. I summarized the continuous adaptation to change sought from these exercises as “flexibility.”

Similar employee training firms have now begun to reach for something a little different: one, which I will call the Joule Company, is running training sessions intended to generate high-energy experiences. One course of training is organized along the lines of a scavenger hunt. The hunt will, according to the company's brochure, lead to a “riotous release of energy.” When the company founder (whose official title is chief energizing officer) allowed me to work on a hunt as a staff member, I learned that encouraging people to experiment with unconventional behavior releases this energy. Teams win points in the exercise by carrying out daring or (for some) embarrassing stunts as a group: singing a love song to a stranger, borrowing a store mannequin, riding in a FedEx truck, shampooing their own hair (all at the same time) in a beauty salon, borrowing someone's official employee ID card, sneaking a dog into a hotel, and so on. Sometimes the public is mystified or annoyed by these activities. A news article interviewed a local merchant about the group: “‘It's a bunch of crazy people,' says an irate florist at a Newbury Street flower shop, apologizing to a customer after the Yellow team interrupts the flow of business by posing for a photograph with a floral arrangement in her shop (worth 40 points in the scavenger hunt).”
¹⁴
But far more often, the company has found, local shopkeepers approve, saying in effect, “it was actually entertaining for my customers—the highlight of our day.”

But the company has designed the hunt to produce specific effects. The company founder explained that the hunt is one of their most popular offerings, especially among the many pharmaceutical clients they have.

It really gets people making decisions together; it gets people showing more of their personality. They come through this powerful shared experience together and because it's in public, there is a positive pressure of stretching outside your comfort zone … of doing things that are a little nerve-racking to some and more comfortable for others. You have this powerful, shared experience where people have cracked open their armor and they've put some of their guts out on the table. They've opened themselves up in new ways, they've laughed equally, they've got stories to tell, going forward…. So you're willing to look at that person differently—you're willing to say, “Wow, this is sort of a normal guy who's just here like I am, trying to protect his livelihood or his turf the way I am.” So it's not a panacea … but it's a lubricant, it's a catalyst, and it's an opportunity.