A Stock Market Book About Your Stock Investing Brain
Helps to explain your stock investing habits!
The stock market book by Jason Zweig titled Your Money & Your Brain
provides some interesting insights into your stock-investing habits.
One of the themes of the book is that ... our investing brains drive us to do things that make no logical sense - but make perfect emotional sense.
The book reveals through using NMR scanning of investors' brains that ... the investing brain is far from the consistent, efficient, logical device that we like to pretend it is.
Lessons from Neuro-economics
Zweig argues that investors need to learn the lessons that are now revealed from neuro-economics. These lessons include ...
- investing gains and losses can produce a biological change that creates significant effects on our brains and bodies
- there is no difference in the neural activity relating to drug taking and successful money-making investments
- when a stock price goes up twice in a row, the human brain uncontrollably expects a third rise
- investors respond with alarm when investment returns which appear to be predictable turn out not to be so
- financial losses and mortal danger are processed in the same area of the brain
- the brain expresses anticipating a gain and actually receiving it in different ways
The final point helps Zweig to explain why money does not buy happiness.
The book makes it clear that most of us do not understand our own behavior.
Zweig explains that this is one of the few books that seeks to make you a better investor by ... showing that everything you ever thought you knew about yourself is wrong.
'Knowing yourself' is an important attribute for value investing and is the main benefit that value investors can gain by reading this book.
Ultimately it is not the stock market nor companies that determine our investing fates. It is ourselves!
Neuro-economics will no doubt provide ongoing insights into the inner workings of investors' brains. This book is recommended as a very good start.
Lets face it. Knowing how our brains 'tick' is very important if we want to be confident with our investing decisions.
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