Market Mind Games: A Radical Psychology of Investing, Trading and Risk.pdf
What if the mystery of market crashes stems from a simple but total misunderstanding of our own minds? Could everything we think we know about ourselves—intelligence and rationality versus emotion and irrationality—be wildly off the mark? Simply put: yes.
With these words, Denise Shull introduces her radical—and supremely rational— approach to risk. Her vision stems from the indisputable fact that human beings can’t make any decision at all without emotion and that emotion gets the first—and last—word when it comes to our perceptions and judgments.
Shull should know. She started out managing major accounts for IBM and then chose to research unconscious emotional patterns instead of getting her MBA. Next she became a trader and trading desk manager while continuing to study biopsychology.
We are all taught that sidelining our emotions is the best way to make good decisions— Shull declares the converse: emotions inform us. Attempting to control them actually increases the risks we take. Shull advocates treating feelings as data, and she convincingly argues that doing so eradicates the baffling question that repeats itself in our heads after making a poor investing decision: “What was I thinking?”
Through a series of “lectures,” Shull logically but engagingly connects emotions, beliefs, and context to our innate reaction to uncertainty and risk (yes, the two are different). In Market Mind Games, she merges more than 20 years of studying risk decisions into a single, astoundingly effective strategy.
A reasonable approach to emotion is the best and only way to win the investing game. The methods Shull details in Market Mind Games shake the foundation of conventional market and decision psychology. And, most important, they work.
From the Publisher
Denise Shull founded ReThink Group, a risk and performance advisory consulting firm. A globally recognized trailblazer, she combines insights from 25 years in the real world of markets, neuroeconomics, and psychodynamic psychology into a radical theory that gets rave reviews. A former member of CME Group, today she belongs to the Association for Psychological Science, the Society for Neuroeconomics, and the Social and Affective Neuroscience Society.
From the Author
Wanting to build a case to prove the value of emotions and needing to use neuroscience, I offer you a story of two graduate students, Michael and Renee, who are about the face the real world. I think (hope) that reading, absorbing and applying the material through their eyes will give you a decision-making edge that no one nor any market can take away.
About the Author
Denise Shull is a globally recognized trailblazer in the psychology of risk. A leading theoretician in how the human brain perceives and decides in the midst of uncertainty, she is most well known for her practical explanations of Behavioral Finance and Neuroeconomic research. A former member of CME Group, who specialized in trading index futures, Shull has become a popular international voice for the role of emotional context in the psychology of risk. She has been quoted in The New York Times, Forbes, The Washington Post and has appeared on CNBC, ABC World News Tonight, The Discovery Channel, Cavuto and PBS’ Nightly Business report. By-lines by her can be found in AR/Alpha Magazine, All About Alpha and on her blogs ReThink Thinking and Psychological Capital.
More about the author
Honestly, I think decision making fascinated me even way back in grade school. Why did people do what they do? For awhile, with the help of a private school, I attributed the answer to something like inherent good and evil – ah the naivete of youth!
I got distracted when I wanted to earn a living but soon a promising career at IBM fell prey to my true interest – explaining my own and others’ behavior. I gave up a chance to attend Stanford B School in order to put myself in a position to study psychology. It took a few years but I ended up at the “design it yourself” Master’s Degree at the University of Chicago – a program that plays a role in the fictional frame MIND GAMES is built on.
What I found was how the human brain builds a labyrinth that executes perception and how that labyrinth depends on emotion. I was satisfied and took my knowledge back to the world of commerce – trading upstairs at The Chicago Board Options Exchange. Everyone used to remark how did one – a neuroscience degree and the other – trading, have anything to do with one another. I didn’t know it at the time but the answer is “everything”.
The maxims of decision making are wrong – control your emotions (logically you only need to control your actions) and go by the numbers (context is everything). As it turns out, our psyches are also fractal – what we learn when we are very young creates an internal mental environment that influences how we think about anything.
I still love to get my eyes on the research and for the most part, to hear academics talk. What I enjoy even more is connecting the dots between what they are finding and how we perceive, judge and decide on questions of the unknown in the real-world and in real time.
I’m lucky to be in a position where I can buck the conventional wisdom. In turn this means to my readers: be prepared, this is an unusual book. And I appreciate your interest in it!