Warren Buffett has long maintained that success in investing doesn’t require anything more than ‘ordinary intelligence,’ but that you do need the right temperament to fight urges that cause other people to chase earnings and then sell into a bear market. Now the principal that he, Charles Munger, and others have argued from experience is getting some scientific backing (h/t Rob Wile at Business Insider).
A study led by Colin Camerer, the Robert Kirby Professor of Behavioral Economics at Caltech, measured brain activity with an MRI while subjects participated in trading simulations and found that neural activity in a particular part of the brain (the nucleus accumbens or NAcc) tracks rising stock prices, but lower earning subjects...
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