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Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality Paperback – September 29, 2008
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From the Inside Flap
The investigation into the economic implications of the lizard brain began in the late 1970sand led to a 2002 Nobel Prize in Economics being awarded to the scholars of this new approachbut only recently have individual investors and market professionals begun to exploit these findings to explain, analyze, and predict market direction. In contrast to old-school assumptions of cool-headed rationality, the new school embraces hot-blooded human irrationality as a core feature of both individuals and financial markets.
Mean Markets and Lizard Brains converts cutting-edge intellectual developments into practical investment steps. Filled with in-depth insights and real-world advice, this guide:
- Provides a timeless blueprint for effective and low-stress investing through a thorough examination and explanation of the lizard brain.
- Summarizes the key findings of the science of irrationality and reveals the biological forces that cause even the smartest of people to make systematic mistakes.
- Sets the macroeconomic stage for choosing investments, with discussions of the economy, inflation, and the value of the U.S. dollar.
- Evaluates investments based on understanding how the lizard brain operates in today's global macroeconomic landscape.
By understanding and taming the lizard brain, you can position yourself to prosper in financial markets that often seem downright mean. Mean Markets and Lizard Brains skillfully identifies the craziness that is part of human nature, helps us see it in ourselves, and then shows us how to profit from a world that doesn't always make sense.--This text refers to an out of print or unavailable edition of this title.
From the Back Cover
"You can win the battle with your own brain."
—Investor's Business Daily
"A useful guide to avoiding poverty."
"Most investors lose money time and again, and they never understand why. They think the market makes no sense, and—guess what—it doesn't, at least to most humans. But to the great lizard brain, all is clear. Successful traders and investors know what the lizard knows. They understand and exploit the very things that Terry Burnham teaches you in this book. Now it's your turn to 'get it.' When you finally do, mean markets will turn into friendly ones."
—Robert R. Prechter, author of Socionomics: The Science of History and Social Prediction
"Mean Markets and Lizard Brains translates neuroeconomics and cutting-edge theories of human behavior into practical advice. While the causes of costly decisions often lie outside our conscious awareness, they need not remain a mystery. The writing is provocative and insightful."
—Professor Vernon L. Smith, Nobel Prize winner in Economics
"A lively and entertaining account of the emerging field of neuroeconomics, where Fear and Greed meet Nature, red in tooth and claw, with some surprisingly practical implications for individual investors, portfolio managers, and other market prognosticators."
—Andrew W. Lo, Harris & Harris Group Professor, MIT Sloan School of Management, and Director of MIT's Laboratory for Financial Engineering
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Top Customer Reviews
Among other things, the books intent is to serve as a primer to behavioral finance and teach how to invest according to the new findings. While the book is very readable, it's not particularly innovative or useful for a non-beginning investor.
The first of the three sections, "The New Science of Irrationality" is by far the most interesting. Mr. Burnham shows us that there is effective two parts to our brain: the pre-frontal cortex and the rest, which is the lizard brain. The pre-frontal cortex is responsible for analysis. The lizard brain controls our instincts and impulses. Our goal in investing should be to rely on the pre-frontal cortex and limit our lizard brains.Read more ›
Professor Burnham weaves insightful personal anecdotes from his vast array of experiences (i.e., as an academic, entrepreneur, investment banker, day-trader, biologist, and United States Marine), and combines them with sound analytical economic thinking (i.e., as a PhD economist from Harvard with up-to-date knowledge of the latest thinking on irrationality). The result is a detailed description of the basis for our poor instincts in financial decision-making, as well as a prescription for improving our performance in this context. Everyone wants to make money by investing wisely, and yet few of us are able to rise above our "Lizard Brain" tendencies. This book goes beyond describing our shortcomings; it teaches us how to think for ourselves in over-riding those "Lizard Brain" inclinations.
I once described "Mean Genes" as the best book I ever read. "Mean Markets and Lizard Brains" challenges that bold assertion. By simplifying a complex topic (i.e.Read more ›
Burnham organizes the book into four parts. The first chapter is the introduction and presents the gist of the book. What is a mean market? The fact that markets can defy the accepted bromides about rational markets and wipe out investors surprisingly quickly and without any hint of mercy. The idea of cosmological indifference comes to mind. The author's vivid image of the "Lizard Brain" refers less to any explicit structure in the brain or any claim to specific evolutionary path to brain development.
Instead, Burnham is referring to the fact that we all have a set of tendencies, hard wired ways of perceiving the world, and bred in behavioral tendencies that worked well in keeping our ancestors alive in the ancient world. However, they are as out of place in our technological world as a lizard might be at the Met. For example, our brains are very good in seeing patterns. The problem is we often see patterns where none exist. On the other hand, we are terrible at perceiving frequencies. However, with training and discipline we can learn to deal with both of these natural tendencies. Without being aware of these potential problems, we too often get ourselves in trouble.Read more ›
Most Recent Customer Reviews
Good analysis of irrationality as it applies to markets. Nice summary of actions a 'rational' investor should take in irrational markets. A few years out of datePublished 3 months ago by Muhammad
Interesting to read with the benefit of hindsight. Written in 2005 and author discussed the possibility of a housing bubble and stated he saw no evidence of it!!! Read morePublished on April 13, 2014 by Dana S. Van Cise
If there is one thing this book teaches you, it is to know oneself. The idea of restraining your impulses and thinking things through is really driven home. Read morePublished on September 9, 2013 by D. Cox
Like most markets and investing books you would do well to take them with a grain of salt. That is the case with this book. Read morePublished on February 17, 2012 by Kindle Customer
Page 17: "Imagine that you are a doctor and one of your patients asks to take an HIV test. You assure her that the test is unnecessary as only one woman out of a thousand with... Read morePublished on August 14, 2011 by Grant
Maybe its just oversimplification, but some of the information here is just plain wrong. For example, in one section he states "There is speculation (both whispered and in the... Read morePublished on January 26, 2011 by CG83
Don't let the funny sounding title turn you away...you'd be doing so at your own peril. Amateur investors are constantly screwing up their portfolios by routinely buying high and... Read morePublished on September 5, 2010 by Allan Reid
great book on psychology and investments. a must read for anyone interested in looking at market psychology.Published on July 8, 2009 by Andrew Krysiak