George Soros built one of the great trading records in financial history, in large part due to his theory of reflexivity. But by his own account, some of his biggest portfolio pivots weren’t triggered by a spreadsheet; they were triggered by backache.
It is a wonderful anecdote—Soros feeling a trade just as sailors feel a storm coming in their bones. But is it physiologically plausible? Fascinatingly, the evidence says yes. Here’s why other investors should listen.
In Soros on Soros (1995), he noted, “I rely a great deal on animal instincts. When I was actively running the fund, I suffered from backache. I used the onset of acute pain as a signal that there was something wrong in my portfolio.” His son Robert worded it in blunter terms: his father’s elaborate market theories often arrived after the fact, rationalising a shift that had really begun with a spasm in his back.
Fight or Flight
When Soros experiences what he refers to as animal instincts (acute pain onset as a signal to act) he may actually be describing his experience of a classic physiological survival response—specifically, the reaction of the psoas muscle. Often nicknamed the fight-or-flight muscle, the psoas contracts when we feel under threat in some way, readying us to brace, fight, or run. As the psoas runs from the lower spine to the thigh (femur), it often presents as aching in the lower back when under tension.
The evolutionary logic behind the stress-psoas connection is as elegant as it is fascinating: Our ancestors, when facing a survival threat, were better positioned to run, or fight, if they had a strong, rapidly contracting psoas muscle (Siccardi et al., 2023). In fact, the psoas is directly implicated in all aspects of these ‘fight or flight’ physical movements which is exactly why it is neurologically activated during the stress response (Koch, 2012).
Paraspinal muscles running along either side of the lower spine are also implicated. A landmark study (Flor, Turk and Birbaumer, 1985) found that patients with chronic back pain experienced a significant tensing of their back muscles when under stress, more so than in any other muscle in their body.
Hardwired to herd?
Someone like Soros, who frequently moves against the herd, often carries the weight of holding a position the rest of the market disagrees with. Research on group conformity has found that going against a group’s judgment activates the amygdala, the brain’s threat-detection centre, more than falling in line does (Berns et al., 2005).
As Soros once noted, “The prevailing wisdom is that markets are always right. I take the opposite position. I assume that markets are always wrong.”
Moving against the herd and dealing with the habitual uncertainty of financial markets raises cortisol over the long term, exposing traders like Soros to chronic cortisol dysregulation (Coates and Herbert, 2008; Zehndorfer, 2018) via our hypothalamic-pituitary-adrenal (HPA) axis. This kind of chronic cortisol (over)exposure can lead to dysregulation, the lowering of our pain threshold, and increasing inflammation and pain (e.g. Hannibal and Bishop, 2014). Soros might be experiencing exactly this response, enabling him to recast his ‘backache as signal’ as a somewhat rational (physiologically triggered) response.
When the Stakes Are High
This is where Soros’s pain signal as an indicator gets really interesting for any self-described contrarian investor. Antonio Damasio’s somatic marker hypothesis, developed with Antoine Bechara, argues that gut-and-body signals, which are picked up through the body’s internal sensing pathways and relayed to the brain, bias our decisions before conscious reasoning has caught up, especially when the stakes are high and the picture is unclear (Bechara and Damasio, 2005). This appears to mirror, exactly, Soros’s practice.
Obviously, none of this proves that a backache can predict a currency crash. But it does suggest that Soros’s famous animal instinct (when combined with his deep financial knowledge and expertise) is a signal genuinely worth listening to.
