Whole Network Most Recent TOP10 Accounting Compliance Ethics SOX

 

Brains and money - 8 tips to avoid investment disaster

Filed in archive risk by leon on August 24, 2007

19131838.jpg

Why do we keep making bad investments? Maybe it's because of the way our brains are wired up, says Jason Zweig, author of Your Money and Your Brain.

Zweig gives eight tips CNN Money, just warnings on what to watch out for. His advice is aimed at tuning the brain into the risks.

Be careful of investing in stocks just because they delivered big years ago. Lightning seldom strikes twice. And what out for sales reps who tell you things like "this can't miss" or "it's a sure bet". As a rule of thumb, if something sounds too good to be true, it usually is. Never make investment decisions in the heat of the moment. Try not to go with the herd, and make sure you have someone there who can argue against ideas that everyone likes. If nothing else, it will get you thinking. Keep most of your money in a low-cost, diversified index fund. Watch your cues, think everything through carefully and goad yourself with provocative questions (e.g. apart from this latest increase in the stock price, what's changed?) and track your feelings.

CNN Money also has a good interview on this issue with Nobel laureatelinks Daniel Kahneman. He says sometimes our brains can't really discern risk.

"How people respond to a risk depends partly on how it is described," Kahneman says. "An investment said to have an 80 per cent chance of success sounds far more attractive than one with a 20 per cent chance of failure. The mind can't easily recognize that they are the same. "


Advertisement


Permalink: Brains and money - 8 tips to avoid investment disaster
Tags: Jason  Zweig  Your  Money  and  Your  Brain  Daniel  Kahneman    money  investment+disaster 

Trackback: http://www.creative-weblogging.com/cgi-bin/mt-tb.pl/88106



Advertisement


Advertisement


CW ToolbarInstall
RSSrss   | See all blog subscribe options
Googlegoogle   |   What is RSS?
Yahoo!yahoo
AddthisAddThis Feed Button
BloglinesBloglines
Newsletter

Use our search feature to look for other interesting posts

Just this blog Whole network
 
Advertisement
Book yours here.



  • Other blogs in the same channel in the Creative Weblogging Network

Advertisement -
Book yours here..






Advertisement - Book yours here..
 
Tagcloud: Accounting boards of directors Compliance corporate crime corporate governance corporate reputation Ethics events executive pay litigation markets regulators risk shareholder activism SOX Sponsored Blog strategy