Evolution created the amygdala’s instinctual survival flight response for lizards to avoid hungry hawks and humans to flee ferocious beasts. It’s a part of our selves that’s come to be known as the "lizard brain". And while over time, the threat of being eaten by savage beasts has dramatically decreased, our "lizard brain" still runs at full speed, making us anxious about all the bad stuff we read in the papers and watch on television. For many investors, it is the constant fear of the next market crash, which results in suboptimal, rash investment decisions. Our lizard brain has the ability to distort reality. Where we might expect our brains would treat equivalent scenarios in a proportional manner for example, behavioural economists Daniel Kahneman and Amos Tversky have shown that the pain of a loss far exceeds the pleasure from a gain. With the advent of the internet and mobile communication, we continually get bombarded with fearful stimuli, resulting in disastrous decision mak...
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