How do we fool ourselves in the stock market?

And what does neuroscience have to do with investment?

And what does any of this have to do with Isaac Newton or the Dutch East India Company,

which ran for 200 years, or Kodak, or the way that zebras like to

heard, or instincts, or emotions, and almost 200 different cognitive biases.

Welcome to Intercosmos with me, David Eagleman. I'm a neuroscientist and an author at Stanford.

And in these episodes, we dive deeply into our three-pound universe to uncover some of the most surprising aspects of our lives.

Today's episode asks, what do brains have to do with the stock market?

So there's this old joke about a man who's looking for enlightenment, and he goes on a journey to find the wise man, and he hikes snowy mountains and fords rivers, and after many

months of toil, he summits a peak and he finds the

wise man sitting there cross-legged at the top and the man drops to his knees and he says oh wise one

what profound words of wisdom can you share with me and And the wise man looks at him and says, buy low, sell high.

Now, whether you think that that's the world's funniest joke, it doesn't matter because

the fascinating part is that the joke has stuck around for generations.

And this is because the advice is so simple.

And yet, most people in the stock market find it incredibly

difficult for their brains to stay on track, to follow that advice. Instead, they buy a stock

once it's shot way up and everyone's talking about it. And when the stock starts crashing,

they do a panic sell.

But of course, that kind of bad decision-making is just the very start of it.

We humans do all kinds of bad decision-making in the stock market. Or more generally, when we're thinking about how to invest our savings.

Why?

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