Emotions May Be Hurting Your Bottom Line

[jeffrey]

An interesting article from the Wall Street Journal indicates that your emotions are making you poorer when it comes to investing. The study was conducted with 15 brain-damaged participants, but only to the portion of their brain that controls basic feelings such as fear and anxiety. Otherwise, all the participants had normal IQs and none of them had problems with logic and cognitive reasoning. The results from the study found:




• The brain-damaged participants were more willing to take risks that yielded high payoffs.

• They were less likely to react emotionally to losses.

• They finished the game with 13% more money than other players.

The conclusions were that:

...participants' lack of emotional responsiveness actually gave them an advantage when they played a simple investment game. The emotionally impaired players were more willing to take gambles that had high payoffs because they lacked fear. Players with undamaged brain wiring, however, were more cautious and reactive during the game, and wound up with less money at the end.