Costly Negative Emotions
“I want to talk about the brain’s basic design and how it can lead to some really bad investing decisions.” –Paul Winkler
Paul is an interesting character and a friend of mine. Check out his short video where he shows how negative emotions can rob the rational thought part of the brain of vital blood and oxygen. These negative emotions can cause us to loose up to 15 IQ points temporarily. That’s a lot of IQ points for most of us with average intelligence: Here’s What You Might Expect from a Market Recovery
To help combat these negative emotions, we use investment policy statements(IPS) with all investors. These set guidelines and standards for prudent investment management.