| What happens inside our brains when we think about money? Quite a lot, actually, and some of it isn't good for our financial health. In Your Money and Your Brain, Jason Zweig explains why smart people make stupid financial decisions -- and what they can do to avoid these mistakes. Zweig, a veteran financial journalist, draws on the latest research in neuroeconomics, a fascinating new discipline that combines psychology, neuroscience, and economics to better understand financial decision making. He shows why we often misunderstand risk and why we tend to be overconfident about our investment decisions. Your Money and Your Brain offers some radical new insights into investing and shows investors how to take control of the battlefield between reason and emotion. Your Money and Your Brain is as entertaining as it is enlightening. In the course of his research, Zweig visited leading neuroscience laboratories and subjected himself to numerous experiments. He blends anecdotes from these experiences with stories about investing mistakes, including confessions of stupidity from some highly successful people. Then he draws lessons and offers original practical steps that investors can take to make wiser decisions. Anyone who has ever looked back on a financial decision and said, "How could I have been so stupid?" will benefit from reading this book. |
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 Inner Workings of the Investing Brain |
| Review Date: September 4, 2007 |
| Reviewer: Allan S. Roth, Colorado Springs, CO United States |
As the title reveals, this book is about the inner workings of the investing brain. It not only explains the mistakes we all make, it takes the next step by telling us what we can do to become better investors.
First of all, this book will dispel any notion that our brains are predisposed to act only in ways that are about increasing wealth. As it happens, our financial decision-making is more about intangibles, such as avoiding regret and achieving pride. Never underestimate the value that comes with bragging about some brilliant investment to anybody who will listen.
Mr. Zweig explains that we really have two brains. Our reflexive brain gets the first crack at decision making, and is essentially based on intuition or how we feel. Our reflective brain, on the other hand, is more logical. The problem is that we usually don't know which part of the brain is at the switch when we make any decision. One key to maximizing wealth is to give the reflective brain some time to respond, and not to react immediately to our gut instinct.
Just when I thought the book couldn't get any better, I read the last chapter on "happiness." It explored the relationship between money and happiness. In spite of the lip service that is paid to believing that money doesn't buy happiness, we all seem to be on the treadmill of acquiring as much of it as we can. The disappointment sets in when we find that raise we got, or that windfall profit, doesn't actually make us happier for long periods.
In summary, content is fascinating but it is Mr. Zweig's writing style that kept me reading when I could barely keep my eyes open. It is a rare gem in its genre, a book that will change your way of investing and your life, and be fun to read.
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Your Mind's Effect on your Money
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| Review Date: November 14, 2007 |
| Reviewer: Craig L. Howe, Darien, CT United States |
Controlling one's emotions is a major key to successful money management. No one who has withered under the emotional pressure of making split second investment decision will argue that it is not.
Financial writer Jason Zweig combining concepts in neuroscience, economics and psychology to explain how our biology drives us toward good or bad investment decisions. He argues our brains lead us to self-deception. We are oath to admit our lack of financial knowledge. We overestimate our ability to perform. We believe we're smart enough to forecast the future even when we have been explicitly told that it is unpredictable. Our impetuousness leads to mistakes of action rather than inaction. In short, although we see ourselves as rational beings; we make irrational investment decisions.
His book blends tales from his visits to neuroscience labs with stories of investing mistakes. From them he pulls lessons and counsel on how investors can make more profitable investment decisions. They are:
1. Take a global view.
2. Hope for the best: expect the worst.
3. Investigate; then invest.
4. Never say always.
5. Know what you do not know.
6. Past is not prologue.
7. Weigh what they say.
8. If it sounds too good to be true, it probably is.
9. Costs are killer.
10. Eggs go splat.
Another that should be added to the list is The Paradox of Choice: Why More Is Less. More general in its approach, it cites many of the same studies. Schwartz, a Swarthmore College professor, cited research from psychologists, economists, market researchers and decision scientists to make five counter-intuitive arguments: We would be better off if we:
1. Voluntarily constrained our freedom of choice.
2. Sought "good enough" instead of "the best."
3. Lowered our expectations about decision's results.
4. Made nonreversible decisions.
5. Paid less attention to what others around us do.
Thoroughly researched, Your Money and Your Brain needs to be studied by anyone seeking to make wiser and more profitable investment decisions. |
Layman's explanation of the investor's brain
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| Review Date: October 11, 2007 |
| Reviewer: Rolf Dobelli, Switzerland |
| Jason Zweig tackles two daunting subjects - neural research and finance - and manages to make both of them accessible and interesting to a general audience. This long overdue book is not the first to apply the lessons of cognitive and behavioral research to personal investing, but it is certainly among the most comprehensive, credible and clearly written of such books. Much of the material will be familiar to students of cognitive science. If you have already read a lot about personal investing, you will find reminders, rather than new material, in Zweig's advice about investment decisions. Nevertheless, we find that he offers useful hands-on information and entertaining anecdotes as he explains why you should listen to your instincts and emotions when you invest. |
Your Money & Your Brain / Author: Jason Zweig
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| Review Date: October 25, 2007 |
| Reviewer: Carl James Martinez, Fajardo, Puerto Rico |
| This book is just amazing.Besides helping you understand how to be a better investor,it opens up a whole new universe in learning how and why us humans think and act the way we do. To say that, most everything we think we know about investing and risk is wrong, is a "HUGE" understatement. The applications that can be put into practice from this book,reach much more farther than just the investing world.I already have been witness to the newly gain knowledge by aplying the principles to myself and unto others.To try and illustrate how powerful this book is,at this very moment I am writing this review, I have not reach the half of it. |
Amazing explanation of why we do what we do with money
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| Review Date: August 15, 2009 |
| Reviewer: Mariusz Skonieczny, ClassicValueInvestors . com |
I believe that investors are their own worst enemies because they are not equipped with an understanding of how to think about financial decisions. In this book, the author proves that investing generates powerful emotions that lead us to take certain actions that may not be in our best interest. He says that there is nothing in our lives that makes smart people feel as stupid as investing does. Being knowledgeable about this topic can help us make better investment decisions that will lead to more wealth. I don't believe that we can maximize our wealth until we learn how to control our minds.
What I like about this book is that the research provides the biological explanation of what goes on in our brains when we make financial decisions. It was interesting to learn that the brain of a person who thinks is about to make money is almost identical to that of a cocaine addict. This book really helped me understand myself, clients, and other investors better, and why we make decisions that we make. It was simply a fascinating read.
- Mariusz Skonieczny, author of Why Are We So Clueless about the Stock Market? Learn how to invest your money, how to pick stocks, and how to make money in the stock market |
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