Notes To NYSSA Discussion With Jason Zweig by Ronald R. Redfield, RedField, Blonsky, Starinsky & Co.
February 28, 2008 (notes taken from October 1, 2007)
Here are notes from when I saw Zweig speak a few months back. He was discussing his book "Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich"
NYSSA discussion with Jason Zweig (10/1/07). Funny , perhaps familiarity with the name Brookfield caused me to be attracted to the investment. Same attraction perhaps as I have focused on Enron for many years.
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I will be quick with my notes here. I wasn’t that in touch with what he was saying. Showing us MRI images of a brain and such. Not my beliefs. Anyway. Some interesting things I saw.
1. Question: A candy and a stick of gum cost $1.10. The candy costs $1.00 more than the stick of gum. How much does the gum cost? 90% of the people will typically give wrong answer as first reaction. Not surprisingly, I gave no answer, as I had to methodically figure it out. Slow baud rate for me.
2. Claims that there is a tribe in Northern Pakistan, called “Qureshi Birdari.” He claims they have a life expectancy of 23 years. He claims this is so low, because they are missing the fear and pain section of their brain. Hence, they are apt to jump off cliffs because looks like fun at the time, and they don’t calculate the consequences. Since, I live a life of doubt, I can’t fathom this one. Hence, I am now googling it (oh, I hated typing that word) http://www.google.com/search?sourceid=na...
3. Familiar feels safe, unfamiliar is scary. As he said that, he reached into his briefcase and startled an audience member. He said, “You need to know how you will react in such a circumstance. You need to think quickly. What are you going to do if you see prices crashing in your Bloomberg?” I think, “ I will do nothing. I will sit, wait, analyze and hopefully keep my cool.” Think Eddie Murphy and Dan Ackroyd in Trading Places.
4. Many of us buy companies because the ticker is familiar and comfortable. Look for unconscious biases. Thinks brown-eyed portfolio managers are apt to own UPS, whereas blue eyed, apt to own Jet Blue. Says, the ratio of dentists with the first names of “Dennis” and “Denise” are greater than typical population ratios. Georges work in Geo something (Geology, Geography, Geothermal). Etc Lanes, live on Lanes, Streets on a Street, etc.
I realize that from August 2007 through November 2007 I have spent a great deal of time on Brookfield Asset Management (BAM). I attributed my fascination with BAM as one of curiosity. I was intrigued with the complexity of BAM and I have never seen such complexity except for Enron. I have had a long fascination with Enron, and all of the events surrounding Enron. I used to think that this fascination was because of the aggressive use of accounting. Now, since I saw Zweig, I think perhaps my fascination with Enron is not the accounting, but the familiarity of the name Enron, as my first name is Ron. Then I started thinking why am I so fascinated with Brookfield? So it hits me, I have a familiarity with the name Brookfield, as my last name is Redfield.
- Important to track your emotions. You can then invert. Keep a journal. “How did the portfolio make you feel today?” I have always felt better when averages are dropping. I don’t know why that is. I have been depressed for much of September.
Ronald R. Redfield
Your Money and Your Brain - Description
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.