Body Chemistry & Behavioral Investing


  1. Our brains are designed to perceive trends.
  2. If a trend repeats a natural chemical called dopamine is released causing the soft euphoria feeling.
  3. If a stock goes up a few times in a row your brain chemistry changes giving you a “natural high.”
  4. You effectively become addicted to your own predictions.


  1. A financial loss fires up your amygdala—the part of the brain that processes fear and anxiety.
  2. Psychologists have shown that the pain of financial loss is 2x as intense as an equivalent gain.
  3. Losing money is so painful that many people sell out near the bottom or refuse to buy more.
  4. Explains why we fixate on the raw magnitude of a market decline and forget to put the loss in proportion.  

–Intelligent Investor, Benjamin Graham & Jason Zweig