Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality [NOOK Book]

Overview

Praise for Mean Markets and Lizard Brains

"You can win the battle with your own brain."
Investor's Business Daily

"A useful guide to avoiding poverty."
—Financial Times

"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 ...

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Mean Markets and Lizard Brains: How to Profit from the New Science of Irrationality

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Overview

Praise for Mean Markets and Lizard Brains

"You can win the battle with your own brain."
Investor's Business Daily

"A useful guide to avoiding poverty."
—Financial Times

"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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Product Details

  • ISBN-13: 9780470440629
  • Publisher: Wiley
  • Publication date: 11/3/2008
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 320
  • File size: 2 MB

Meet the Author

Terry Burnham is a leader in the application of biology to economics and finance. He is the Director of Economics at Acadian Asset Management LLC, and a research scientist at Harvard University. He was an economics professor at Harvard for many years, and has been an active and extremely successful participant in the financial markets for over twenty years. Dr. Burnham has a PhD in business economics from Harvard University, a master's in finance from MIT, an MS in computer science from San Diego State University, and a BS in biophysics from the University of Michigan. He is also a coauthor of the international bestseller Mean Genes: From Sex to Money to Food, Taming Our Primal Instincts.
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Table of Contents

Preface to the New Edition.

Preface to the First Edition.

Acknowledgments.

Chapter One: Introduction: Mean Markets and Lizard Brains.

Part One: The New Science of Irrationality.

Chapter Two: Crazy People: Lizard Brains and the New Science of Irrationality.

Chapter Three: Crazy World: Mean Markets and the New Science of Irrationality.

Part Two: The Old Art of Macroeconomics.

Chapter Four: U.S. Economic Snapshot: America the Talented Debtor.

Chapter Five: Inflation: Rising Prices and Shrinking Dollars.

Chapter Six: Deficits and Dollars: Uncle Sam the International Beggar.

Part Three: Applying Science and Art to Bonds, Stocks, and Real Estate.

Chapter Seven: Bonds: Are They Only for Wimps?

Chapter Eight: Stocks: For the Long Run or for Losers?

Chapter Nine: Real Estate: Live in Your Home; Make Your Money at Work.

Part Four: Profiting from the New Science of Irrationality.

Chapter Ten: Timeless Advice: How to Shackle the Lizard Brain.

Chapter Eleven: Timely Advice: Investing in the Meanest of Markets .

Notes.

Index.

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Sort by: Showing all of 5 Customer Reviews
  • Anonymous

    Posted January 9, 2006

    Fun and interesting read!

    Conventional wisdom about investing suggests that people are basically rational, markets are basically efficient, and nobody can earn a reward without some risk. One corollary of this conventional wisdom is that individual investors ought to own stocks. Individual investors have been acting conventionally wise - but that may be exactly the wrong thing to do. Author Terry Burnham draws on the relatively new science of behavioral economics - informed by insights into human reasoning that have been discovered by cognitive researchers - and offers investment advice dramatically at odds with conventional wisdom. Burnham, a former Harvard professor with ample experience in finance, puts his thoughts in pop language, drawing not on market studies but on movies and other references to current culture, to make many of his most salient points. What he loses in `gravitas¿, he gains in entertainment value. We find that this investment book manages to be fun to read, while providing the grain of salt readers should take to temper more conventional economic advice.

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  • Anonymous

    Posted August 25, 2005

    Dubious Reasoning

    The book is disappointing. I was hoping that it would cover the ¿science of irrationality¿ in some detail. The coverage did not seem very thorough or very useful. While there is some advice for making investments, I question the usefulness of that advice because I think the author has made some errors in reasoning. On page 271 the authors lists three ¿facts,¿ two of which I do not think are true. The first, that stock prices cannot grow faster than the economy forever. The third, that the United States cannot run a trade deficit forever. On page 178 the author apparently gives his rationale for the first conclusion: ¿This is a mathematical truism. A part of a system cannot sustain a higher growth rate than the system for an indefinite time.¿ Unfortunately for the author, the value of stocks (implicitly the value of businesses at a point in time) is not included in the value of the economy (the value of goods and services produced during a time period). As a counter example, assume that stock prices vary with profits and that profits are based on a return on assets less the cost of debt. If the return on assets increases, profits can increase faster than the growth in assets (e.g., the growth in the economy). Return on assets can increase indefinitely because it can be based on intellectual or intangible factors. Profits could also increase indefinitely if businesses increasingly took on more debt and the cost of debt were less than the return on assets. Regarding the third ¿fact,¿ I believe that if the demographic profile of the United States remained older than its trading partners, there could be an indefinite current account deficit. I think the author¿s fallacy here is to apply what is true for the global economy to a subset. The United States could be consistently consuming more than it produces if the remainder of the globe were in the opposite position. It would naturally be in a consuming posture if it had more retired people. To pay for this consumption, of course, there would be a transfer of assets from the U.S. to the net producers. The author makes a silly statement on page 185: ¿When it comes to investments, the logic of averages is unavoidable. No investment class can be above average indefinitely.¿ Of course it is difficult to know what the author means, but the implication from the surrounding material is that the returns on cash, bonds, stocks, real estate, and other asset classes will all be the same over the long term. Clearly there is more risk with some classes than others. Why would any investor settle for the same return on a more risky investment as on a riskless investment?

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  • Anonymous

    Posted March 6, 2005

    I hate financial books, but . . .

    I hate financial books, but in this case I was most pleasantly surprised. The book is not only informative but entertaining as well. The author takes you by the hand and literally skips you through the mine field of investment clichés, emerging at the other side, the reader has a passel of useful and actionable investment knowledge based on hard facts and real data. Mean Markets and Lizard Brains is just great!

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  • Anonymous

    Posted November 21, 2008

    No text was provided for this review.

  • Anonymous

    Posted August 1, 2010

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