The Physiology of Emotional and Irrational Investing

1 Introduction

Banks should train traders like athletes.

— Professor John Coates (2012b)

Working out Wall Street: taming animal spirits

The financial markets are a rollercoaster,¹ and this book follows the same theme – the seduction of money; our ruinous, heady and high stakes pursuit of it; the incredible fortunes and calamitous losses that have been made in its name; and the perpetual and foolish mismatch that has always existed – and will always exist – between our evolutionary programming and the design of the financial markets. Whilst behavioural finance and neurofinance have opened the floodgates in terms of recognising the role of neurological and physiological factors in emotional, irrational investing, what is still missing is an answer ...