The brain can override rational thinking from "summary" of Your Money and Your Brain by Jason Zweig
Our brains are powerful organs, capable of incredible feats of logic and reason. We rely on them to make decisions both big and small, from what to eat for breakfast to where to invest our money. But despite our best efforts to think rationally, our brains can sometimes lead us astray. One of the most fascinating aspects of the human brain is its ability to override rational thinking. This phenomenon occurs when our emotions and instincts take control, leading us to make decisions that go against our better judgment. As much as we may try to analyze a situation logically, our brains can easily be swayed by fear, greed, or other powerful emotions. In the world of finance, this can have serious consequences. When the stock market is in turmoil, our brains may tell us to sell everything and run for the hills, even if it means locking in losses. On the other hand, when markets are skyrocketing, we may feel invincible and throw caution to the wind, taking on excessive risk. These irrational impulses are deeply ingrained in our brains, stemming from our evolutionary past. In times of danger, our ancestors needed to react quickly to survive, relying on fight-or-flight responses to stay alive. While these instincts served them well in the wild, they can be detrimental in the world of investing. Recognizing when our brains are overriding rational thinking is the first step in combating this phenomenon. By understanding our own cognitive biases and emotional triggers, we can learn to pause, reflect, and make more informed decisions. It takes practice and self-awareness, but with time, we can train our brains to think more rationally when it comes to money and investing.
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