1. www.joelweintraub.com www.healthhumor.com 610-825-2179
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2. Money and the Brain The Brain and Investing
Nucleus Accumbens
Intraparietal Sulcus
Amygdala
Pre-Frontal Cortex

3. Nucleus Accumbens

4. What Does the Nucleus Accumbens Do?
Food
Water
Sex
Money
Risk

5. Nucleus Accumbens Brains center for emotional rewards
Triggers a feeling of greed from just getting the chance to win
NA responds before the pre-frontal cortex is aware of the potential for winning
NA flares as if you are on cocaine

6. When you Win the Lottery
You don’t think of the negative when you buy a lottery ticket.
You are still in the dream state. After you win now you have details to contend with
This is also what occurs when the market is moving up

7. Intraparietal Sulcus
Doesn’t like to lose money

8. Gambling You are guaranteed to win $100
Would you take the chance to double $100 with the risk of losing it all?
The Intraparietal Sulcus fires with the chance of losing it all
Why will some people double down?
Helps us Imagine the Outcome of Future Events
The gambling sets off intense images of fear
Most will favor the sure thing

9. Intraparietal Sulcus Located
Parietal Lobe
Yellow lobe

10. Intraparietal Sulcus

11. Intraparietal Sulcus Sure loss of $100
You can try to break even but risk losing $200
Intraparietal Sulcus fires at losing $100 or $200
The Intraparietal Sulcus does not fire with the chance of breaking even
Most will prefer the chance to break even
This is why investors don’t want to sell a losing stock

12. Amgdala
How does the amygdala interfere with rational investing?

13. What is the Amygdala and What Causes it to React?
The more recent and vivid an image the greater the impact

14. Amygdala

15. Amygdala

16. How to Reduce Fear in Your Clients

17. Who has a Better Investing Record?
Men or women
By what margin %
Why?

18. Who Does Better at Investing?
Women
1% gain over men
The reason
Men view negative events (natural disasters, crime and financial disasters with anger
Women tend to be more fearful than angry

19. Two Different Viewpoints
Through the lens of anger
the world seems more certain, more amenable to our control and less risky
Through the lens of fear
the world appears full of uncertainty, beyond our control and rife with risk
women trade less frequently
hold less volatile portfolios
expect lower returns than men

20. Our Irrational Fear
What is riskier?
Alligators
Bear
Deer
Shark
Snakes

21. Answer to What is Riskier
Deer caused 130,00 fatalities
7X more than all other animals combined

22. Fear Match Cause of Death with number of annual fatalities Suicide
Homicide
War
815,00
520,00
310,00

23. Recent Survey with 1000 Investors
They thought there was a 51% chance any year that the market could drop by 1/3

24. S & P’s 6 Worst Bear Markets Since 1876
Peak Date
Trough Date
Peak
Trough
Drop
09/1929
06/1932 31
4.7
-84
10/2007
03/09
1565
676
-56.8
08/2000
02/2003
1485
837
-43
04/1973
12/1974
118 67
08/1937
04/1938
16.74
9.89
-40.9
02/1876
06/1877
4.52
2.73
39.6

25. Rolling 1,3,5, 10 & 20 Year Periods

26. Real Risk Inflation eroding savings
Only 31% of people surveyed were worried they might run out of money during retirement

27. Pre-Frontal Cortex
This is where you come in

28. Who wants to be a Millionaire?
Emotional vs. Rational Investing
Doubling a penny to $1 million
How $8,000 can compound to $1 Million
History of the Stock Market
Rule of 72
72/Rate of Return = Year
72/10% = 7.2 years /7.2% = 10 years
It’s only $1/Day
Law of diminishing returns
Do you really need that big house or fancy car?

29. Dollar Cost Averaging Exercise You invest $10 every month
1st month the mutual fund is selling for $10.00
2nd month the mutual fund is selling for $5.00
3rd month the mutual fund is selling for $7.50
Did you make money, lose money or break even

30. Dollar Cost Averaging 1st month you bought 1 share at $10.00
2nd month you bought 2 shares at $5.00
3rd month you sell your 3 shares at $7.50
$7.50 X 3 = $ $20 invested = $2.50
Profit = $2.50

31. Price Earnings Ratio Lemonade Stand is worth $20
You are asked to buy one share at various prices:
Stock = $ Earnings = $1 = 20:1 Growth Stock
Stock = $20 Earnings = $2 = 10:1 Value
Stock = $ Earnings = $4 = 5:1 Lots of Value
If stock shoots up to 20:1 and earnings remain at $4
$20 X $4 = $80
Stock = $ Earning = $4 = 20:1 Growth Stock

32. Stock Market Start with the end in mind
How would I feel if the market moved 10-40%
Losing money feels at least 2x as painful as gaining the same amount
Notice the patterns in life

33. Asset Allocation & Rebalancing
Keep consistent
Sample Asset Allocation

34. Keep Asset Allocation Consistent
Very Conservative Conservative Moderate Aggressive
Stocks 20% Stocks 40% Stocks 60% Stocks 80%
Bonds 40% Bonds 35% Bonds 25 % Bonds 15%
Cash 40% Cash 25% Cash 15% Cash 5%

35. Begin With the End in Mind

36. How to Win In Any Market V U L

37. When Is It Time to Sell? First Scenario Should I sell $10,000?
$100,000 in mutual fund portfolio
Should I sell $10,000?
Market goes down 10% after client sells
Market goes up 10% after client sells

38. When Is It Time to Sell? Second Scenario Should I sell $100,000?
$1 million in mutual fund portfolio
Should I sell $100,000?
Market goes down 10% after client sells
Market goes up 10% after client sells

39. Motivational Interviewing
Don’t tell them what to do
Remember you are working as a team

40. Review The Brain and Investing
Nucleus Accumbens
Intraparietal Sulcus
Amygdala
Pre-Frontal Cortex

41. www.joelweintraub.com www.healthhumor.com 610-825-2179
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