Mar

30

I have been doing some light reading on the brain recently that describes behaviour as it pertains to marketing (Martin Lindstrom's Buyology). There is some interesting research on politics and brain behaviour in it (and let''s face politics nowadays is nothing more than marketing). I was very intrigued by how liberal and conservative brains behave in very specific ways and how people are just not capable of overriding their biases towards a certain way of thinking. The brains of conservatives and liberals function in a very different manner. When given the same stimuli, very different parts of the brain "fire up" and stimulate very different responses between the these two groups. Facts that do not support a liberal or conservative point of view can be heavily filtered, ignored or even used to justify/support their actual point of view. They (either liberal or conservative) are almost impervious to facts that fall that outside of their world view.

The same is true for religion and sports. We all have view on religion and see/hear/smell/touch things that bring about reactions based on our views. When a sports figure is viewed by people, different parts of their brain "fire up" based on whether they like or dislike that figure. Religious messages in marketing, unless directed at a specific religious group are guaranteed to turn off a good chunk of population while positively stimulating a different chunk.It seems that brand loyalty goes beyond a logo. It is a deep seated subconscious phenomena that applies not only to the cars we drive or the clothes we wear, it applies the religion and/or philosophy we believe, and the sports teams that we root for.

As I read more and more of this book, I am fascinated by how humans process the same information not only differently, but do most of it on an unconscious and involuntary level. It is very difficult to make changes to how we perceive the world because of the way our brains are programmed. It is very uncomfortable to consider another point of view when our brains work so desperately to find the fault in others point of view as opposed to the common ground.

These biases have trading applications. I have always been a boring stodgy investor. I've eschewed leverage and high risk. I've never swung for the fences and been happy with hitting singles and stealing a base now and then. But a couple of years ago, I stepped outside of my comfort zone and applied leverage to the investment strategy that had worked out so well for me two decades. The results were horrible. As I look back on that ill-fated foray, I wonder what was going on in my brain that I was unaware of, i.e. what subconscious filters were firing up in my head that prevented me from seeing the downside of the mistake that I was about to make…beyond the obvious one of leaving my arena of success. What makes me different from those that take on leverage so successfully? What makes it so hard for me to see a liberal point of view besides the fact that my brain can come up with thousands of reasons why they are wrong and thousands of examples of failure…and not one example of success…yet a liberal can not fathom how I can be so cold hearted. As nice as it would be to truly walk a mile in another man's moccasins to understand his point of view, it probably wouldn't do any good. We don't need to borrow his shoes, we need to borrow his brain. But since science hasn't figured out how to do that quite yet, you may want to read Buyology in the meantime.


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