Coined: Can Brain Scans Predict The Market? via ZeroHedge
By Kabir Sehgal, the author of Coined: The Rich Life of Money and How Its History Has Shaped Us. He is a former vice president at an investment bank.
Can brain scans predict the market?
I’m not good at predicting the market. At first, I thought it was just me. In 2008, I began working in sales and trading at an investment bank. I lacked formal training in fundamental security analysis, and my projections rarely matched actual outcomes. Yet it wasn’t until the great financial crisis that I realized that even well-trained professional forecasters can get it incredibly wrong. That the IMF, Fed, and several asset management firms and investment bank research departments didn’t see the crisis coming left me with a question: is there a better way to forecast? I searched for answers for several years while I researched my book Coined: The Rich Life of Money and How Its History Has Shaped Us. I eventually concluded that if we want to become better at financial forecasting, we shouldn’t just consult stock charts but brain scans.
Peter Lynch was one of the best growth investors of all time. As the Magellan Fund manager at Fidelity Investments between 1977 and 1990, he averaged a 29.2% annual return. Q1 2021 hedge fund letters, conferences and more The fund manager's investment strategy was straightforward. He wanted to find growth companies and sit on them Read More
Of course, I wasn’t the only one surprised with the inaccuracy of professional forecasters. To his credit, Allan Greenspan admitted that he was shocked that his financial forecasts were wrong. In his book, he calls for a fundamental rethinking of how economists forecast. This is already happening, to a degree. Several leading economists contributed entries to the compendium “What Have We Learned? Macroeconomic Policy After the Crisis.” Many suggest better macro prudential measures like higher capital requirements, which should lessen market volatility and create more visibility for forecasters. But in his critique of this text, economist Alan Blinder goes even further by calling into question the prevailing assumption on which modern economics is built – that humans are rational, logical actors.
“Homo economicus, an efficient, rational, calculating machine, never worries about complexity. But Homo sapiens is an entirely different creature. We humans are poor and biased calculators. We regularly succumb to fads, fancies, and passions. We can be fooled.”
In one study, the behavior of over 400 people in an affluent community was analyzed. These are supposedly self-interested people who built considerable wealth. Yet only seven percent of these people acted in a manner similar to homo economicus. In the words of quantitative finance expert Paul Wilmott, “Economists’ models are just awful. They completely forget how important the human element is.” Nassim Nicholas Taleb puts it more emphatically, “We have to build a society that doesn’t depend on forecasts by idiotic economists.” Maybe the idiocy of which he speaks is that we’ve long made assumptions about human behavior with little scientific basis. But increasingly, neuroscientists can provide scientific insights into how we make financial decisions.
It was late at night, but I was wide awake. I was browsing YouTube and came across a lecture of Brian Knutson, a neuroeconomist at Stanford University. Neuroeconomics is an interdisciplinary field, but it’s essentially comprised of neuroscientists who study how humans make financial decisions. In the lecture, Knutson explained how he could accurately predict whether someone would buy or sell a stock by scanning their brain. Moreover, he described how genes influence our investment decisions. I wasn’t just fascinated with the accuracy of his forecasts. But that he was establishing a biological basis for financial forecasting. He started with the brain and then looked at the resulting financial decisions – instead of just assuming that we acted in line with a theory of human behavior.
See full article here.
Coined: The Rich Life of Money and How Its History Has Shaped Us – Description
The importance of money in our lives is readily apparent to everyone–rich, poor, and in between. However grudgingly, most of us accept the expression “Money makes the world go round” as a universal truth. We are all aware of the power of money–how it influences our moods, compels us to take risks, and serves as the yardstick of success in societies around the world. Yet because we take the daily reality of money so completely for granted, we seldom question how and why it has come to play such a central role in our lives.
In Coined: The Rich Life of Money and How Its History Has Shaped Us, author Kabir Sehgal casts aside our workaday assumptions about money and takes the reader on a global quest to uncover a deeper understanding of the relationship between money and humankind. More than a mere history of its subject, Coined probes the conceptual origins and evolution of money by examining it through the multiple lenses of disciplines as varied as biology, psychology, anthropology, and theology. Coined: The Rich Life of Money and How Its History Has Shaped Us is not only a profoundly informative discussion of the concept of money, but it is also an endlessly fascinating and entertaining take on the nature of humanity and the inner workings of the mind.
Coined: The Rich Life of Money and How Its History Has Shaped Us – Review
“Simply relax and float along the current with Sehgal, and find yourself in the Galápagos, the Federal Reserve’s gold vault, a neuroscience lab or ancient Mesopotamia, all the while having no idea where you are headed next…Sehgal is a tireless and eloquent guide, and knows just how long to stay at each stop.” —Financial Times
“Coined: The Rich Life of Money and How Its History Has Shaped Us is that rare book indeed – a fun romp through the history of human exchange, taking up the subject of money in its physical, psychological, philosophical, and historical forms. Like Salt, the topic serves not as a lens that narrows, but as a backdrop for a panoramic viewpoint, sparkling writing, and an exploration of a world you may never have known existed.”
—Rachel Kleinfeld, Senior Associate, Carnegie Endowment for International Peace
“Money jingles, jangles, confuses and betrays us. Readers will be surprised and charmed by Kabir Sehgal’s far-flung and fascinating search for the root of money and the spell it weaves around us.”
—Todd G. Buchholz, former White House economic adviser and author of New Ideas from Dead Economists
“Kabir Sehgal has done us a great service in writing this book. He has presented in this book everything that money has meant to people over the centuries and with a multidimensional perspective. He has prepared the ground for us to take it forward, to give new meaning to money, to assign it new roles in our lives, and imagine the future of money as a foundation upon which we can build the future of the world we all cherish. Thank you, Kabir.”—Muhammad Yunus, Nobel Peace Prize Laureate, Founder of Grameen Bank (from foreword)
“Coined: The Rich Life of Money and How Its History Has Shaped Us doesn’t resemble any of the usual text books on money. For one thing, it’s actually fun to read–and Kabir Sehgal will stimulate your thinking about our financial crisis and banking.”—Paul Volcker, Former Chair of the Federal Reserve
“An exceptional examination of the history of money. Kabir has written an engaging narrative that spans thousands of years and introduces readers to important people who have impacted the chronicle of currency.”—Jimmy Carter, Former US President
“The best things in life are free, but ever since civilization began money has had a profound impact on humanity. Kabir’s book brings the story of currency to life and is worth spending a few of your hard-earned coins on.”—Sir Richard Branson, Founder, Virgin Group
“Well-written. Clever. Innovative. This amazing book will get you thinking about money in completely new ways. If you want to understand how money has impacted the human condition, for better or worse, and how it will continue to shape our behavior, read this book.”—Sheila Bair, Former Chair of the Federal Deposit Corporation
“Kabir Sehgal has tackled the topic of money and written a fascinating account that weaves together history, philosophy, and personal anecdotes. He provides insights that are both riveting and thought-provoking.”—Walter Isaacson, bestselling author of Steve Jobs and President of the Aspen Institute
“Coined: The Rich Life of Money and How Its History Has Shaped Us is a world history of currency that looks at the different forms money takes across time and across cultures. Mr. Sehgal’s anecdotes are wide-ranging and include the birth of exchange in the Galapagos Islands; the art sought after by coin collectors in Vietnam; a tour of the Federal Reserve’s vaults in New York; and the way bees trade pollen in the hive.”—Bill Clinton, Former US President
“Kabir Sehgal has created an ideal book for anyone interested in understanding how money has impacted our world. His thought provoking and impressive writing style makes this an enjoyable and educational read.”—William H. Rogers, Chairman & CEO, SunTrust Banks
“Kabir Sehgal takes readers on a wide-ranging, fascinating, and thought-provoking tour of the historical, economic, cultural, religious, political, artistic, neurological and even futuristic story of money. The love of money and credit often results in debt addiction and painful boom and bust cycles. This book will make you ponder what it all means.”—
Anat Admati, George G.C. Parker Professor of Finance and Economics, Stanford Graduate School of Business and author of The Bankers New Clothes: What’s Wrong with Banking and What to Do about It
Coined: The Rich Life of Money and How Its History Has Shaped Us by Kabir Sehgal