Practical Investment Decision-Making Tips from Neuroscience (Video)

In a recent white paper titled, “The Art of Algorithmic War,” the ReThink Group’s Denise Shull and Bill Long provide a practical overview of recent neuroscience research into decision making and judgment. Much of this investment decision-making research is put to practical use by Shull in her practice, in which she advises Wall Street traders and investor on how to do their jobs better.

Aside from her successful consulting practice, Shull is also author of the book Market Mind Games: A Radical New Psychology of Investing, Trading and Risk; writes for Psychology Today, Hedge Fund Intelligence, and the Compliance Exchange; and she has been quoted in the Wall Street Journal, the Washington Post, and the New York Times.

Here is an outline of my interview with Shull about practical investment decision making tips from neuroscience:

00:19 – 01:16: Introduction

01:16 – 02:09: What led Shull to write The Art of Algorithmic War, and why emotions are absolutely crucial for good decision making

02:09 – 02:58: How the necessity of emotions to decision making has been received in the investing world

02:58 – 04:52: The difference between social brains and social markets; just being around other people changes how you make a decision

04:52 – 06:40: Discussion of the unconscious thought effect (UTE) — i.e., people are better able to make decisions after a period of distration — and how it helps investors to make better decisions

06:40 – 07:45: How decision fatigue affects investors’ judgment

07:45 – 10:04: What is the difference between cognition and feeling, and why this is a critical distinction for investors

10:04 – 12:58: How the fractal psyche tends to badly influence investment decisions

12:58 – 15:14: Simple steps to incorporate neuroscience’s advice on better judgment, including a “miracle cure” for bad decisions

For more practical advice on dealing with decision fatigue, see Shull’s article on the topic on Absolute Return or check out “Overcoming Decision Fatigue” in CFA Magazine.

Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.