A Scientific Look At Making Bad Investments

2006-03-24

According to scientists it is your brain that causes that indigent reflex that causes you to make bad investments. Its been said that the part of the brain that is most primitive and animal like is the section to blame. It is referred to as the limbic system. Its attributes are from the more primitive part of our brain.

Scientists say that this part of the brain is always in competition with the other. They also say that our brains have not yet adapted to the modern world yet. Therefore the primitive part of the brain takes over in a lot of situations. They pertain to this as a see the mammoth eat the mammoth scenario. A lot of scientists say that we get sucked in to certain situations that set us up for financial failure. When we can understand what situations trigger this less evolved part of the brain we can figure out how to contradict it.

Scientists have shown that when humans think of making money that the chemical dopamine is produced in increasing amounts. Dopamine has nothing to do with the decision making part of the brain. The more dopamine that is produced the more our emotions guide us to make the wrong decision. The process of delayed gratification is also something that can guide your brain to making a decision that is less affective than if you thought about it and used the logical part of the brain.

Bad memories have a tendency to last longer than good ones; this is a result of the brain naturally trying to avoid bad things. Trust also has a lot to do with decisions we make. We live in a social society and rely on trust in very important ways in our life.

To fix these problems is not all that hard. Learn to recognize the situations that trigger emotional decisions. Do not stick to money ideas that are or have a lot of drama about them. Set your goals for the long-term. Even out the ups and downs by diversifying you portfolio. Put a little discipline in your selling routine. And of course put a little excitement in your money by taking a little and playing with it in a separate fund. You can go wild and be secure in not collapsing your important investments. Basically use your head the right way and your money will flourish without sacrificing anything.

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