Why the investors find the market so seductive ? It turns out that our brains are hardwired to get us into investing trouble ; humans are pattern seeking animals . Psychologists have shown that if you present people with a random sequence and tell them that it is unpredictable - they will never the less insist on trying to guess what is coming next .
Likewise , we know that the next roll of the dice will be seven , that a basketball player is due for a base hit , that the next winning number in the powerball lottery will definitely be 4-27-9-64-46-45 and that this hot little stock is the next Microsoft . Groundbreaking new research in neuroscience shows that our brains are designed to perceive tends even where they might not exist .
Thus , if a stock goes up a few times in a row , you reflexively expect it to keep going and your brain chemistry changes as the stock rises , giving you a natural high . You effectively become addicted to your own predictions . But when stock drops that financial loss fires up your amygdala the part of the brain that processes fear and anxiety and generates the famous " fight or flight " response that is common to all cornered animals .
Just as you cannot keep your heart rate from rising if a fire alarm goes off , just as you cannot avoid flinching if a rattlesnake slithers onto your hiking path , you cannot help feeling fearful when stock prices are plunging .
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