Your Money and Your Brain Quotes

“In a psychology lab in Haifa, Israel, 61 people were given lottery tickets, each with an equal chance of winning a prize worth about $25. Before the prize drawing, the participants could trade their ticket for someone else’s; if they did, they got a gourmet chocolate truffle. Only 80% of the people actually believed that every ticket had the same chance of winning; 10% thought their own ticket was more likely than others to win, while another 10% felt they held a ticket with less than equal odds. Not surprising, 5 out of 6 people who thought they held a superior chance of winning refused to exchange their tickets. But then came two surprises. First, among the folks who agreed that every ticket was equal, 55% refused to exchange their own for someone else’s. And among those who thought their own ticket was less likely than others to win, 67% still refused to trade for another person’s ticket! What makes people act so strangely? If you trade away your own ticket for another, and then your original one turns out to be the winner, you will feel like a loser and an idiot. On the other hand, if you keep your original ticket and someone else’s turns out to win instead, you can just shrug it off. (After all, every other ticket you might have traded for was a loser.) When you imagine your future feelings, doing something that results in a loss feels intensely real and painful. But not doing something—and thereby missing out on a gain—feels much more vague.”
― Jason Zweig, Your Money and Your Brain

“The neural activity of someone whose investments are making money is indistinguishable from that of someone who is high on cocaine or morphine;”
― Jason Zweig, Your Money and Your Brain

“perseguir acciones o fondos de moda es una forma segura de fracaso;”
― Jason Zweig, Tu Dinero y tu Cerebro: Cómo la neuroeconomía puede ayudar a mejorar tus inversiones

“Cuando el mercado estaba subiendo, dijiste que tenías una alta tolerancia al riesgo. Cuando bajó, te volviste intolerante de repente.”
― Jason Zweig, Tu Dinero y tu Cerebro: Cómo la neuroeconomía puede ayudar a mejorar tus inversiones

“nunca maximizarás tu riqueza a menos que puedas optimizar tu mente.”
― Jason Zweig, Tu Dinero y tu Cerebro: Cómo la neuroeconomía puede ayudar a mejorar tus inversiones

“A survey of 800 people with a net worth of at least $500,000 found that 19% of them agreed with the statement, “Having enough money is a constant worry in my life.” But among those who were worth at least $10 million, 33% felt that way. Somehow, as wealth grows, worry grows even faster. Fewer than half of these rich people felt that “as I have accumulated more money in my life, I have become happier.”
― Jason Zweig, Your Money and Your Brain

“How much money you make is less important than how much you want—and how you spend it. Furthermore, no matter how much or how little money you have, you can use it to lead a happier life if you understand the limits of what it can do for you and the power you can exert over it with self-control.”
― Jason Zweig, Your Money and Your Brain

“Blaise Pascal hit the heart of the truth when he wrote, “All the misfortunes of men come from only one thing: not knowing how to remain at rest in a room.”
― Jason Zweig, Your Money and Your Brain

“If I didn’t already own this stock, would I want to buy it at this price? If I had no idea what the stock price was, would I want to own a piece of this business? Now that the stock is even cheaper, hasn’t my margin of safety (see Chapter Six, p. 149) gotten even wider?”
― Jason Zweig, Your Money and Your Brain

“The logic of selling is crystal-clear: What you paid for an investment should not determine whether you bail out. If you think a stock is more valuable than its current price, you should keep it. If its current price is higher than what you think it is worth, you should sell it. And if you desperately need cash, of course that justifies a sale. But how much you paid for it is beside the point.”
― Jason Zweig, Your Money and Your Brain

“GET HELP PULLING THE TRIGGER. Because it can be so hard to sell a hopeless loser, you may need to get used to the idea. If you’ve reexamined your original reasons (see “Use Your Words,” Chapter Seven, p. 172) and concluded that an investment truly was a mistake—but you still can’t face getting rid of it—then you need a push. Psychologist Robin Hogarth of Pompeu Fabra University in Barcelona suggests changing the log-on password for your brokerage account to something like “dumpmylosers.” Typing that reminder every time you check on your account, puts you in the position of a musician who practices constantly. The idea of selling losers will become “second nature” to you; as you internalize it, you will become more comfortable with the need for action.”
― Jason Zweig, Your Money and Your Brain

“One of the best ways, then, to cure portfolio paralysis is to talk the situation over with someone you trust. A friend or parent, spouse or partner, can help you push aside your shame and blame. You should never sell an investment purely because it has gone down, but if a sudden drop makes you aware that you never knew what you were doing, then talking it over can help. In order to learn from a mistake, you must first admit you made a mistake. It’s much healthier to do that out loud than to kick yourself in private shame.”
― Jason Zweig, Your Money and Your Brain

“The more an outcome appears to be the result of your own choice and the more readily you can imagine having done something different, the more painful your regret is likely to be. So, whenever possible, do as little as possible. Instead of making judgments one at a time, you should follow policies and procedures that put your investing decisions on autopilot. Think of it as cruise control for your portfolio. In 1995, I got a speeding ticket driving my in-laws’ car—and was so mortified that I swore I would never get another. Ever since, whenever I get on a highway, I check the speed limit and set my cruise control—eliminating all worries that I will get careless or emotional and end up speeding. “The more you can automate your investing,” says psychologist Thomas Gilovich of Cornell University, “the easier it should be to control your emotions.”
― Jason Zweig, Your Money and Your Brain

“Even though it may do less financial damage, a loss is more psychologically painful than a foregone gain. Thus, with hindsight, you will kick yourself more over what you did not do than over what you did, even though your errors of commission probably cost you more money. Because of the funny way regrets unfold over time, your feelings blind you to the financial reality of the situation.”
― Jason Zweig, Your Money and Your Brain

“Knowing that something painful might happen is nearly as bad as the pain itself; the brain flares up almost as fiercely in anticipation of expected pain as it does in response to actual pain. The insula generates feelings of disgust not only when you lose money, but when you think you might, just as you are grossed out not only when you step in dog poop, but whenever you see it. After all, that’s why you don’t step in it. And anticipating that you will feel disgusted with yourself if you lose money drives you away from riskier investments.”
― Jason Zweig, Your Money and Your Brain

“The obvious conclusion is that avoiding a loss is a milder form of gain, and missing out on a gain is a diluted form of loss. When you think about what might have been, you are creating imaginary outcomes—but real emotions.”
― Jason Zweig, Your Money and Your Brain

“furiously. When the odds of a gain were 50/50, missing it suddenly flipped on the regret circuits. That suggests a basic rule of how your investing brain is built: The higher you think the odds are of making money, the more regret you will feel if you don’t.”
― Jason Zweig, Your Money and Your Brain

“Out of two million trades by retail investors over a six-year period, 15% of the buy orders were repurchases of stocks that the investors had sold within the previous twelve months. And which stocks did they buy right back? Investors were twice as likely to repurchase the stocks they had sold at a gain than those they had sold at a loss. Knowing these stocks were winners once, investors eagerly bought them back, especially when they dropped below the price at which they first sold them. People seem to be telling themselves, “I came this close to striking it rich, and I’m not missing out again!” (Alas, the stocks they buy back do not perform better than those they sell or hold.)”
― Jason Zweig, Your Money and Your Brain

“A study of dozens of Olympic athletes showed that, on average, bronze medalists were happier than silver medalists. After all, the silver medalists just missed the gold, while those who won the bronze just missed earning no medal at all.”
― Jason Zweig, Your Money and Your Brain

“The more regret they feel, the more likely they are to play the postcode lottery again—as if taking another chance can make up for having missed the last one.”
― Jason Zweig, Your Money and Your Brain

“Counterfactual thoughts often begin with “If only I had…” or “If only I hadn’t…” Bill, for example, might torment himself with thoughts like, “If only I hadn’t stopped to tie my shoe, then I would have won the $10,000 myself.” Counterfactual thinking creates an alternative universe in which the outcomes are always knowable and the right thing to do is always obvious. The more easily you can transport yourself into one of these imaginary worlds, the more regret you will feel over the mistake you made in the real world.”
― Jason Zweig, Your Money and Your Brain

“Like a lot of notions that seem obviously true, it’s largely false. Believe it or not, once you have a handful of options, adding even more choices will lower your odds of making a good decision and increase your chances of regretting whatever decision you do make. Having a few choices may be good, but too much choice is nothing but trouble.”
― Jason Zweig, Your Money and Your Brain

“Found money” can do funny things to your head. Let’s say you go searching in a department store for a $100 item and unexpectedly find it on sale for $50. You buy it—and then take the $50 you just “saved” and spend it on things you would never have bought otherwise. When supermarket shoppers come across “instant coupons” in the store, they spend roughly 12% more on spontaneous purchases than other shoppers do—as if they feel compelled to reward themselves for saving money.”
― Jason Zweig, Your Money and Your Brain

“In a study of mutual funds that got new managers, researchers ranked the funds’ stock holdings from best to worst return. On average, the new managers sold 100% of the stocks ranked at the bottom—implying that their predecessors must have been so paralyzed by their own mistakes that only a new broom could sweep the portfolio clean. The funds that cling most desperately to their losers underperform by up to five percentage points annually.”
― Jason Zweig, Your Money and Your Brain

“As is so often the case, however, what makes no economic sense makes perfect emotional sense. “When you sell a loser,” explains psychologist Daniel Kahneman, “you don’t just take a financial loss; you take a psychological loss from admitting you made a mistake. You are punishing yourself when you sell.” On the other hand, says Kahneman, “Selling a winner is a form of rewarding yourself.”
― Jason Zweig, Your Money and Your Brain

“Doing anything—or even thinking about doing anything—that could lead to an inescapable loss is extremely painful.”
― Jason Zweig, Your Money and Your Brain

“In the financial version of Sir Isaac Newton’s First Law of Motion, investors at rest tend to stay at rest unless an outside force acts upon them. Instead of taking action whenever necessary, we do nothing whenever possible. We invest by inertia.”
― Jason Zweig, Your Money and Your Brain

“Once you make an investment, you can’t help regarding it as yours. You have invested part of yourself in it. The word invest literally means to clothe yourself in something. When you buy a stock, you wrap it around yourself, and it becomes a part of you. From that moment forward, the prospect of having to get rid of it becomes a wrenching thought.”
― Jason Zweig, Your Money and Your Brain

“Sweden, workers who are not ready to choose their own pension investments can have the money placed automatically into a “default” fund, a low-cost index portfolio that blends stocks and bonds. In recent years, roughly 97% of eligible workers have left their money in the default fund, even though they were free to switch at any time to any of more than four hundred other funds. (Luckily, in this case, that’s not a bad choice.)”
― Jason Zweig, Your Money and Your Brain

“What’s more, buying a mug you do not own feels like an act of commission; deciding not to sell one you do own feels like an act of omission. Your instincts tell you that you will feel more regret over a mistake of action than a mistake of inaction. So it’s natural to offer less money to buy a mug you don’t yet have than you will accept to sell one you do have.”
― Jason Zweig, Your Money and Your Brain