Investment magnate Warren Buffett has famously suggested that investors should try to “be fearful when others are greedy and be greedy only when others are fearful.”
That turns out to be excellent advice, according to the results of a new study by researchers at Caltech and Virginia Tech that looked at the brain activity and behavior of people trading in experimental markets where price bubbles formed. In such markets, where price far outpaces actual value, it appears that wise traders receive an early warning signal from their brains—a warning that makes them feel uncomfortable and urges them to sell, sell, sell.
To read the original article: Neuroeconomists Confirm Warren Buffett's Wisdom | ScienceBlog.com
