From GuruFocus:
Brain damage can create superior investment results, at least according to James O’Shaughnessy in his classic What Works on Wall Street. O’Shaughnessy refers to a study by Baba Shiv of Stanford University that found that people that had suffered damage to the amygdala or the insula regions of their brains made better investment decisions and had higher returns than those with normal, healthy brains (see the 2005 Wall Street Journal article on the same study).
As it would turn out, those two brain regions happen to control how we perceive risk. Shiv found that his healthy test subjects allowed their prior losses to cloud their judgment, causing them to be excessively risk averse. Meanwhile, the brain-damaged investors had no such inhibitions and approached each new investment opportunity without being rattled by prior losses.
So, what conclusions are we to reach from this? Were successful contrarian investors like Warren Buffett dropped on their heads as babies? Should we lobotomize all money managers to improve their performance?...MORE
