Jason Zweig > Quotes

“The market is a pendulum that forever swings between unsustainable optimism (which makes stocks too expensive) and unjustified pessimism (which makes them too cheap). The Intelligent Investor is a realist who sells to optimists and buys from pessimists.”
― Jason Zweig, The Intelligent Investor

“WHEN YOU INVEST, your mind has a mind of its own. At the very moment when you are most convinced of your own rationality, you may be feeling rather than thinking your way toward a decision.”
― Jason Zweig, The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself

“The alluring, long-shot chance of a huge gain is the grease that lubricates the machine of innovation.”
― Jason Zweig

“In a psychology lab in Haifa, Israel, 61 people were given lottery tickets, each with an equal chance of winning a prize worth about $25. Before the prize drawing, the participants could trade their ticket for someone else’s; if they did, they got a gourmet chocolate truffle. Only 80% of the people actually believed that every ticket had the same chance of winning; 10% thought their own ticket was more likely than others to win, while another 10% felt they held a ticket with less than equal odds. Not surprising, 5 out of 6 people who thought they held a superior chance of winning refused to exchange their tickets. But then came two surprises. First, among the folks who agreed that every ticket was equal, 55% refused to exchange their own for someone else’s. And among those who thought their own ticket was less likely than others to win, 67% still refused to trade for another person’s ticket! What makes people act so strangely? If you trade away your own ticket for another, and then your original one turns out to be the winner, you will feel like a loser and an idiot. On the other hand, if you keep your original ticket and someone else’s turns out to win instead, you can just shrug it off. (After all, every other ticket you might have traded for was a loser.) When you imagine your future feelings, doing something that results in a loss feels intensely real and painful. But not doing something—and thereby missing out on a gain—feels much more vague.”
― Jason Zweig, Your Money and Your Brain

“That’s why one of my favorite investing rules is “If the market is open, your wallet should be closed.” You should never act on an investing idea the same day you get it; the next day, your mood and situation will have changed, and the facts may look different to you. Sleeping on it is one of the simplest and best ways to make sure your decision is not just a momentary whim.”
― Jason Zweig, The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself

“What history does prove is that how risky stocks seem, and how risky they actually are, are inversely correlated.”
― Jason Zweig, The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself

“The risk you are likely to be rewarded for taking is the risk of owning all stocks. In effect, rather than betting on one roll of the dice, one spin at the roulette wheel, or a single hand at the blackjack table, you can own the whole casino. You can do this effortlessly, cheaply, and reliably by buying a total stock-market index fund, a low-cost portfolio of all the stocks worth owning.”
― Jason Zweig, The Little Book of Safe Money: How to Conquer Killer Markets, Con Artists, and Yourself

“Good advice rarely changes, while markets change constantly. The temptation to pander is almost irresistible. And while people need good advice, what they want is advice that sounds good.”
― Jason Zweig

“Being right is the enemy of staying right because it leads you to forget the way the world works”
― Jason Zweig

“If we were strictly logical, we would judge the odds of a risk by asking how often something bad has actually happened under similar circumstances in the past. Instead, explains psychologist Daniel Kahneman, “we tend to judge the probability of an event by the ease with which we can call it to mind.” The more recently an event has occurred, or the more vivid our memory of something like it in the past, the more “available” an event will be in our minds—and the more probable it will seem to happen again. But that’s not the right way to assess risk. An event does not become more likely to recur merely because its last occurrence was recent or memorable.”
― Jason Zweig, Your Money and Your Brain

“Counterfactual thoughts often begin with “If only I had…” or “If only I hadn’t…” Bill, for example, might torment himself with thoughts like, “If only I hadn’t stopped to tie my shoe, then I would have won the $10,000 myself.” Counterfactual thinking creates an alternative universe in which the outcomes are always knowable and the right thing to do is always obvious. The more easily you can transport yourself into one of these imaginary worlds, the more regret you will feel over the mistake you made in the real world.”
― Jason Zweig, Your Money and Your Brain

“Faced, for example, with a difficult problem to solve—“Will this stock keep going up?”—many investors consult a chart of recent price performance. If the trend line slopes upward, then they immediately answer “Yes,” without realizing that their reflexive system has tricked them into answering an entirely different question. All the chart really shows is the answer to a much easier problem: “Has this stock been going up?” People in this kind of situation “are not confused about the question they are trying to answer,” says Kahneman. “They simply fail to notice that they are answering a different one.”
― Jason Zweig, Your Money and Your Brain

“Doing anything—or even thinking about doing anything—that could lead to an inescapable loss is extremely painful.”
― Jason Zweig, Your Money and Your Brain

“The more regret they feel, the more likely they are to play the postcode lottery again—as if taking another chance can make up for having missed the last one.”
― Jason Zweig, Your Money and Your Brain

“In the long run a stock has no life of its own; it is only an exchangeable piece of an underlying business. If that business becomes more profitable over the long term, it will become more valuable, and the price of its stock will go up in turn. It’s not uncommon for a stock’s price to change as often as a thousand times in a single trading day, but in the world of real commerce, the value of a business hardly changes at all on any given day. Business value changes over time, not all the time. Stocks are like weather, altering almost continuously and without warning; businesses are like climate, changing much more gradually and predictably.”
― Jason Zweig, Your Money and Your Brain

“But it’s the denominator that matters; that’s where the real money is. After all, the sum total of your wealth is a much more important number than the amount by which it rose or fell on any given day. Even so, many investors fixate on the numbers that change the most, overlooking the much larger amounts of money that are at stake overall.”
― Jason Zweig, Your Money and Your Brain

“It’s important to realize,” says Stanford’s Knutson, “that the magnitude of a long-shot reward is going to drive your behavior far more than the probabilities, which are minuscule. If you can recognize that, then you should be able to say to yourself, ‘I should walk away and play with my kids for an hour and then think about it.’” Making a financial decision while you’re inflamed by the prospects of a big gain is a terrible idea. Calm yourself down—if you don’t have kids to distract you, take a walk around the block or go to the gym—and reconsider when the heat of the moment has passed and your anticipation circuits have cooled off. So don’t just blink; think.”
― Jason Zweig, Your Money and Your Brain

“During 1998 and 1999, one group of stocks outperformed the rest of the technology industry by a scorching 63 percentage points—merely by changing their official corporate names to include .com, .net, or Internet.”
― Jason Zweig, Your Money and Your Brain

“In the stock market, the shares that are most popular and familiar to investors change hands more often, and that, in turn, attracts still more attention to these stocks as they turn up in the day’s list of “most active shares.” Because of all that extra exposure, the stocks with the highest trading volume have higher returns in the short run—but, in the long term, they tend to underperform by two to five percentage points per year. In the stock market, which is a game of inches, that’s a country mile.”
― Jason Zweig, Your Money and Your Brain

“The neural activity of someone whose investments are making money is indistinguishable from that of someone who is high on cocaine or morphine;”
― Jason Zweig, Your Money and Your Brain

“As is so often the case, however, what makes no economic sense makes perfect emotional sense. “When you sell a loser,” explains psychologist Daniel Kahneman, “you don’t just take a financial loss; you take a psychological loss from admitting you made a mistake. You are punishing yourself when you sell.” On the other hand, says Kahneman, “Selling a winner is a form of rewarding yourself.”
― Jason Zweig, Your Money and Your Brain

“As Bobbi Bensman’s story shows, the conventional wisdom that every investor has a certain level of “risk tolerance” is little more than a lie. In reality, your perception of investment risk is in constant flux, depending on your memories of past experiences, whether you are alone or part of a group, how familiar and controllable the risk feels to you, how it is described, and what mood you happen to be in at the moment. The slightest change to any of these elements can turn you from a raging bull to a cowardly bear in a matter of seconds.”
― Jason Zweig, Your Money and Your Brain

“A control group of people with undamaged brains readily learned to favor the forecaster whose predictions turned out to be most accurate. The prefrontal patients, however, made their judgments perceptually instead of conceptually, relying on what Grafman calls “cues that typically had nothing to do with a good choice.” One patient, for example, preferred the advisor whose image was displayed on a green background, “since it is springtime.” It seems that if the prefrontal cortex is impaired, the brain’s internal checks-and-balances system breaks down—and the reflexive areas may take over unopposed.”
― Jason Zweig, Your Money and Your Brain

“The similarity to Nintendo or PlayStation has a chilling implication: Researchers have found that when players do well at a video game, the amount of dopamine released in their brains roughly doubles, and that this surge can linger for at least a half-hour afterward. So the more “price points” you can see, the more your brain will fool itself into thinking it has detected a predictable pattern in the numbers—and the more powerfully your dopamine system will kick in. As we’ve seen, it can take as few as three price changes to make you think you’ve spotted a trend; in years past, when investors got their stock prices out of the newspaper, it could take three days to gather that much data, while today a market website will get you there in less than sixty seconds. No wonder, by the late 1990s, the typical “investor” in popular tech stocks like Qualcomm, VeriSign, and Puma Technology owned them for an average of less than eight days at a time.”
― Jason Zweig, Your Money and Your Brain

“You might think that your likes and dislikes are conscious choices, that your preferences are based on inferences you make from studying the evidence. Instead, Zajonc’s findings show, our preferences come out of our experiences—regardless of whether they ever were conscious. Whatever we experience most often, we are most likely to end up liking”
― Jason Zweig, Your Money and Your Brain

“Because the alternative frames play so differently on our feelings, we don’t even notice that all four programs are equivalent.”
― Jason Zweig, Your Money and Your Brain

“So the possibility of loss makes the hope of gain even more tantalizing. If you think about it, this makes perfect sense. Evolution has naturally designed us to pay closer attention to rewards when they come surrounded by risks—just as we all know we need to be more careful when picking a rose than when picking a daisy.”
― Jason Zweig, Your Money and Your Brain

“rapid movement fire up our minds to expect that the market must be “trying to do something.”
― Jason Zweig, Your Money and Your Brain

“A single drop in the stock market on one Monday in autumn disrupted the investing behavior of millions of people for at least the next three years.”
― Jason Zweig, Your Money and Your Brain

“perseguir acciones o fondos de moda es una forma segura de fracaso;”
― Jason Zweig, Tu Dinero y tu Cerebro: Cómo la neuroeconomía puede ayudar a mejorar tus inversiones