Your Money And Your Brain – Book Review

by Mr. Cheap

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Yesterday Mike posted his review of “Your Money and Your Brain”.  Coincidentally I took the same book out of the library a while ago and had been meaning to write up my impressions about it, so now seems like the perfect time for us to have a “virtual book club”.  Canadian Capitalist also wrote up his impressions about the book a while back, so that’s three perspectives you get.

In “Your Money and Your Brain” author Jason Zweig sets out to explain the psychology and neuroscience behind how we think about money.  I’ve read similar books, such as Malcolm Gladwell’s Blink and Tipping Point, and I tend to like books about cognition.

Mixed in with investing anecdotes, the author visits researchers working in the field and participates in their experiments while explaining their findings to us.  Early on he introduces the concept of our reflexive and reflective systems (dealing with emotions and complex problems respectively).  Many of the ideas throughout the book discuss how the reflexive system trips us up in investing decisions (and Zweig’s advice is to let your reflective system take control by not rushing into any decisions, sleep on the issue and give your reflective system a chance to process it).

Because money is so closely tied up with all our biological rewards (you can buy any of them), investing decisions light up a number of primal areas in our brain.  The obvious problem of our brains evolving to deal with short term threats like predators rather than long term threats like inflation plays into a number of the issues he discusses.

Overall, while I found the book interesting, I didn’t find much I could take away from it and apply to make myself a better investor (I definitely don’t agree witht he tagline “How the new science of neuroeconomics can help make you rich”). Just as I didn’t change how I live my life after reading Gladwell, I don’t think I’ll change how I invest after reading this book.  “Don’t rush into investing decisions” is good advice, but I was hoping to get a little more than that out of a 340 page book.  Perhaps it was unfair of me, but I was expecting more applicable techniques.

I also found the lack of bigger themes a bit disappointing.  While its the nature of the work, little interesting tidbits from different reasearch programs, it very much comes across that way.  It would have been nice if he could of put the different research results into a larger model but that wasn’t how the book presented its material.

While I can definitely see why Mike and the Canadian Capitalist enjoyed it so much, and I also found it a good read, I would only recommend it as a pleasure read, not necessarily as a book that will make you a better investor.

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{ 5 comments… read them below or add one }

1 Four Pillars

Good review.

I do think the books general theme can make you a better investor but you are right – it’s not all that directly applicable to your investing.

2 deepali

Oooh, sounds like my kind of book. I recently picked up “Predictably Irrational”, so that’s first up, but I’ll add this to the list. I do have to say, though, that books like “Stumbling on Happiness” and “The Tipping Point” do change my life. They make me question the assumptions I have about my own objectivity, and help me better understand other people’s behavior too.
Not money-related, but there’s a story in The Tipping Point about a woman who was beaten to death by her husband in front of an apt building – and no one called 911 (everyone thought everyone else would do it). I remembered that when I awoken at 4 am by screaming in my alley a year ago…

3 Canadian Capitalist

Thanks for the link Mr. Cheap! I haven’t read tipping point yet, it’s on my list for a long time.

4 Stock Buster

I don’t read the book yet. But I’m very interesting in readed soon.

Anyway, you have a very good point of view…

Stock buster.

5 Marlen Arguedas

Your Brain & Your Money brings to me certain important issues about neuro-science and feelings and emotions that are part of the human nature. However, I agree with one of the critics who states that this book does not meant to help you to became a good or bad investor. What it teaches me is to be aware about the psychology of the investor who use a biological brain , and that is the issue in Zweig’s ideas because not many of us are experts in the field of behavioral sciences, and , perhaps, many of the readers count more in numbers than in psychological facts. Well, Jason Zweig, the author of this book brings that subject with a tricky persuation in the cover of the book telling that, : How the new science of neuroeconomics can help make you rich. The latest is bolony in terms of buying the idea of the accumulation of money, but could be truth in terms of making the readear to underestando the neuroscience of making choices to invest and in life iteself. No wonder we are bombarded by thousand of commercials telling all of us that we are Homo- Shoppers rather than Homo-Sapiens. Perhaps the intention of Zweig is to make the reader a better shopper of ideas and stocks, you choose it when you decided top read the book. And ….I am in the same boat
too!
Marlen Arguedas ( Costa Rica)

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