What goes on in your brain when markets are crashing? Within 12 milliseconds, or one-25th the time it takes you to blink your eye, upsetting financial news can activate the amygdala, a structure in your brain that generates emotions like fear and anger.

That bad news can come in many forms - a headline in this newspaper, a market bulletin on your iPhone, a stock chart on a trading website, a price update or a market pundit preaching doom on television.

Just a flash of the red colour that symbolises a downtick is enough to excite the circuitry in your brain - and to make reflective thinking more difficult.

Merely reading the words "stock market plunges" in this sentence will raise your pulse, quicken your breathing, increase your blood pressure and tense your muscles.

Thus the impulse to stay continuously informed about your investments in times of turmoil leads to nothing but trouble.

Psychologist Paul Andreasen found that investors who received frequent updates on their holdings earned half the returns of those who got no news at all.

Neuro-economics has revealed another crucial aspect of how the investing brain works: expectation is more powerful than experience. In general, anticipating a gain is much more emotionally intense than earning that gain - and expecting to lose money feels even worse than losing it turns out to be.

The brain is not just the computer between our ears; it is a ball of emotion ready to burst in the worst possible way at the worst possible time.

The misery is no more likely to be justified than the elation was.

The greatest investors do not turn their emotions off; rather, they turn them inside out, training themselves to distrust their most obvious and natural feelings.

You should also control your cues. Just as a recovering alcoholic knows better than to trust his self-control and walk into a tavern, you should minimise your contact with anything that can fixate your attention on falling market values. Break your obsession with the market by going for a long walk, playing with your children or sneaking out to the cinema.

Stop clicking on market websites. Stay away from the Bloomberg terminal. You will surely be happier - and almost certainly end up richer.

Some excerpts from another Zweig interview...

http://www.researchmag.com/cms/research/Templates/website/PrinterFriendly.aspx?%7b82485740-FAFD-40E4-B4AC-83147C0C46E7%7d - We spoke with Zweig, now collaborating on a book with Nobel Prize-winning psychologist Daniel Kahneman , to learn the ways in which financial advisors can apply neuroeconomics in their practices.

Can neuroeconomics help make advisors better investors?

It can certainly help you understand clients better. You can also use it as a mirror to ask yourself, “What am I actually good at?” Most people aren’t as good at most things as they believe they are. We all have an inner con man who lies to us about our past, our future and even the present.

Are advisors’ brains different from the brains of investors who aren’t professionals?

I’m very sad to say that I think they don’t differ. Overconfidence is probably the thing that trips up more people than anything else. It’s very hard for professionals who have real expertise to admit the limits of that expertise. Financial advisors may provide great advice on the mechanics of investing and financial planning, but I’m very skeptical that most advisors can add value by picking stocks or mutual funds.

You write that “the neural activity of someone whose investments are making money is indistinguishable from that of someone high on cocaine.” So this goes for advisors too?

There’s no doubt that professionals are as subject to these kinds of influences. It’s a myth that advisors are more rational or logical or less emotional than clients. If you’re an advisor who picked a mutual fund that turns out to be the top performing fund in America three years in a row and you think you can walk on water, you’re kidding yourself.

How should advisors approach investing , then?

What all the research boils down to is not to make decisions but rather to follow rules and procedures and to act in accordance with policy. If you make decisions, you’re being reactive to what other people or the market is doing. If you own Intel, let’s say, and you buy more because it’s going up and you’re on a hot streak, that addiction kicks in. When it goes down, you might sell in a panic. The more procedures you put in place, the fewer decisions you have to make, the fewer things you have to justify to clients and the fewer mistakes you’ll make.

You say neuroeconomics shows that the brain is more aroused when you’re anticipating an investment profit than when you actually get one. What a bummer!

This new idea tells us that expecting an outcome is emotionally much more intense than experiencing the same outcome. And that’s true both on the upside and the downside. The fear of loss usually turns out to be worse than the actual loss, which is why so many clients take less risk than they should.

What if anticipation about an investment outcome generates wild excitement in an advisor?

A simple solution is to keep an emotional journal. Once a day, religiously, make a little note about your gut feelings as to where the financial markets are headed, such as, “How do I feel about my portfolios today? I’m really happy about how things went. It makes me feel good.”

Every once in a while, take a look at what your emotions were telling you and what happened afterward. You’ll learn that if you turn them upside-down, your own emotions are a very good guide to what’s about to happen in the markets. I don’t believe that investors or advisors can turn their emotions off. But I do believe you can learn to turn them inside-out. The way you do that is by seeing how unreliable they are. This will enable you to cure your hindsight bias and to learn that by investing in the grip of emotion, you will always get things backwards.

Is there a related phenomenon regarding clients?

Yes, how easy or difficult things are to understand also sends a signal. For example, when investors read stock and mutual fund prospectuses with numerous pages of disclosure about every conceivable risk, what happens in their minds is a huge backfire effect. They think, “I can’t believe how much stuff is here, and I can’t understand any of it.”

How can advisors use this finding?

The very important lesson is that if you want clients to accept something readily, make it simple, clear and compelling. If you want to turn people away from something, give them mountains of documentation. It will make them feel: this is too hard to understand, so it can’t be very good.

What can financial advisors do to try to prevent this from occurring when it comes to clients’ emotions?

An advisor who has a long-term perspective has to make sure that everything in their office is in accord with that principle. If you’re talking to a client about holding stocks and mutual funds for five years or longer and there’s a Bloomberg terminal on your desk or CNBC playing in the background, you’ve blown it.

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Life can only be understood backwards—but it must be lived forwards

Let me give a simplye example, ala Kulman jee style.

Admin jee may take appropriate steps, if message found to be out of order. When Buffett jee can use words like "sex" in his sermons, I thought chalo...let's follow the MASTER

When asked what keeps most individual investors from succeeding, Graham had a concise answer: “The primary cause of failure is that they pay too much attention to what the stock market is doing currently.”