February 28, 2008 (notes taken from October 1, 2007)
Here are notes from when I saw Zweig speak a few months back. He was discussing his book “Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich”
NYSSA discussion with Jason Zweig (10/1/07). Funny , perhaps familiarity with the name Brookfield caused me to be attracted to the investment. Same attraction perhaps as I have focused on Enron for many years.
I will be quick with my notes here. I wasn’t that in touch with what he was saying. Showing us MRI images of a brain and such. Not my beliefs. Anyway. Some interesting things I saw.
1. Question: A candy and a stick of gum cost $1.10. The candy costs $1.00 more than the stick of gum. How much does the gum cost? 90% of the people will typically give wrong answer as first reaction. Not surprisingly, I gave no answer, as I had to methodically figure it out. Slow baud rate for me.
2. Claims that there is a tribe in Northern Pakistan, called “Qureshi Birdari.” He claims they have a life expectancy of 23 years. He claims this is so low, because they are missing the fear and pain section of their brain. Hence, they are apt to jump off cliffs because looks like fun at the time, and they don’t calculate the consequences. Since, I live a life of doubt, I can’t fathom this one. Hence, I am now googling it (oh, I hated typing that word) http://www.google.com/search?sourceid=na…
3. Familiar feels safe, unfamiliar is scary. As he said that, he reached into his briefcase and startled an audience member. He said, “You need to know how you will react in such a circumstance. You need to think quickly. What are you going to do if you see prices crashing in your Bloomberg?” I think, “ I will do nothing. I will sit, wait, analyze and hopefully keep my cool.” Think Eddie Murphy and Dan Ackroyd in Trading Places.
4. Many of us buy companies because the ticker is familiar and comfortable. Look for unconscious biases. Thinks brown-eyed portfolio managers are apt to own UPS, whereas blue eyed, apt to own Jet Blue. Says, the ratio of dentists with the first names of “Dennis” and “Denise” are greater than typical population ratios. Georges work in Geo something (Geology, Geography, Geothermal). Etc Lanes, live on Lanes, Streets on a Street, etc.
I realize that from August 2007 through November 2007 I have spent a great deal of time on Brookfield Asset Management (BAM). I attributed my fascination with BAM as one of curiosity. I was intrigued with the complexity of BAM and I have never seen such complexity except for Enron. I have had a long fascination with Enron, and all of the events surrounding Enron. I used to think that this fascination was because of the aggressive use of accounting. Now, since I saw Zweig, I think perhaps my fascination with Enron is not the accounting, but the familiarity of the name Enron, as my first name is Ron. Then I started thinking why am I so fascinated with Brookfield? So it hits me, I have a familiarity with the name Brookfield, as my last name is Redfield.
5. Important to track your emotions. You can then invert. Keep a journal. “How did the portfolio make you feel today?” I have always felt better when averages are dropping. I don’t know why that is. I have been depressed for much of September.