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Lizard brain(s):
J ancestral traits, 5“6, 234“237,
240“241, 267
Japanese economy, 66“67
control of, 283, 286“287
currency value, 133
defined, 2
deflation, 98, 106
environment and, 231, 237, 239“241
growth of, 75“76
financial blind spot of, 7, 55“56, 61,
Japanese Nikkei, 251
231, 237, 287
The Jetsons, 47“48
history of term, 11“12
Johnson, Ross, 16
influence on behavior, 23, 24
Jones, Paul Tudor, II, 25“26, 28, 244“245,
interest rate overconfidence, 157
275
patterns in random behavior, 30“33,
Jordan, Michael, 230
238“239, 268
Jordan Rules, 230“231
role in financial decisions, 5“7, 10, 12,
Jubilee year, 97
242“243
K self-control issues, 33“34
stubbornness, 25“29
Kahneman, Daniel:
testosterone levels, 28“29
decision-making research, 4“5, 14“15
Lo, Andrew, 60
Heuristics and Biases, 25
Index 305



mean, defined, 35
Loans:
mean, profiting from, 219, 230, 268,
adjustable rate mortgages, 216“219,
283“286
221“223
in other countries, 165“166, 168“169,
default on, 128“130
170
fixed-rate loans, 110, 221“223,
rational, 35“36
271
trends in, 268
housing loans, 128
Market Wizards (Schwager), 25
Loan shark(s), 128
Marx, Groucho, 215
Lombardi, Vince, 79
Mast-strapping, 260“262
Losers average losers, 248“250
Mathematical calculations, 15“17
Loss aversion, 29“30, 249“250
McGraw, Phil, 182
Low-risk investments:
McGurk, Harry, 23
barriers to, 277“279
McGurk effect, 23“24
as insurance, 276“277
McManus, Tom, 184
pain of, 275“277
Mean Genes (Burnham and Phelan), 16,
risk of, 271“275
17
steps to, 270“271
Mean market(s):
stress of, 275“276
defined, 35
M profiting from, 219, 230, 268,
283“286
MacBeth, 52
Medewar, Sir Peter, 12
MacDonald, John, 23
Melo, Fatima, 196, 197, 198, 214
Macroeconomics (Mankiw), 92
Mental accounting, 255“257
Malkiel, Burton, 40
Mexican economy, 124“125
Mandy (grandfather), 21
Microsoft:
Mankiw, Gregory, 2, 92, 139, 142, 194,
analysis of, 171“173
196, 199
growth of, 175, 179, 183
“Man with the Golden Brain” (Daudet),
price to earnings ratio (P/E), 199
125“126
value of dollar and, 186
Margin calls, 215“216
The Mind™s Past (Gazziniga), 22
Market irrationality, 36“38
Mini bar(s), 259“260
bubbles and crashes (see Bubbles and
Minsky, Marvin, 20“21, 247
crashes)
A Monetary History of the United States,
debate on, 42
1867“1960 (Friedman and Schwarz),
examples of, 41“42
87
1987 stock market crash, 42“44
Money. See also Dollar(s)
profiting from, 49“50, 51“53
devaluation of, 119“120, 122“125
sentiment as predictor of future returns,
fiat money, 93“94
45“49
government control of, 93“94, 103“105
Market(s):
inflation and supply of, 102“103,
communist markets, 166
106“108
condition of, 78, 279
mystery behind, 87
economic conditions and, 187“189
storage options for, 155
efficient market hypothesis (see Effi-
supply, growth of, 105, 107“108
cient market hypothesis)
306 Index



Patterns in random behavior, 30“33,
Money forms:
238“239, 268
cheese, 92
Paycheck security, 98“100, 188“189,
fei, 92“93
271
gold, 92
P/E. See Price to earnings ratio (P/E)
paper, 87, 91, 113
Personal debt, 271, 273“274
rice and grains, 92
Personal savings rate, 71, 73“74
seashells, 94“95, 102
Pigeon experiment, 30“32
Money illusion, 98“100
Pitch Black (movie), 6
Monty Python cheese shop game, 34
Poker, 258“259
Mortgage debt, 216. See also Loans
The Pope of Greenwich Village, 128
Motley Fool, 191, 250“251
Popper, Karl, 52
Motorcycle purchase, 103“104
Portfolio insurance, 217“218
Motorcycle ride through game park,
Prechter, Robert, 273
224“225
Precious metal prices, 53“54
Multiplication factor system, 96
Predictions, making, 153“154
Mutual funds, 3, 45
Prefrontal cortex, 11“12, 20, 21, 23“24,
N 34, 283
Pregnant women study, 58“59
NASDAQ, 43
Price to earnings ratio (P/E):
1987 stock market crash, 42“44, 181, 182,
Cisco, 210
217
of houses or property, 199“202, 204
Nixon, Richard, 93, 118
Microsoft, 199
Nominal exchange rate, 121“122
S&P 500, 200
No-red zone system, 262“264
stocks, 19, 199
Norfield, Tony, 131
Treasury bonds, 200
Nortel, 59
Probability problems, 237
Nuclear war, 169“170, 171
Productivity of U.S. companies:
O business investment, 74“75
consumer spending, 72“74
Object location memory, 241
economic growth, 79“84
Odean, Terrance, 47, 48, 245
economic wealth, 82“83
The Odyssey, 260
government debt and, 274“275
Opportunity cost, 150“153
growth of, 80, 273“275, 276
Oracle, 43
idle capacity, 74“75
Organ-swapping arrangements, 88“90
purchasers of, 71“77
Origin of Species (Darwin), 80
Profet, Margie, 58
The Out of Towners (movie), 122
Profitable investing, 55“56, 268
Overconfidence, 18“19
aggregate financial position, 255“257
P anticipating future events, 242“243
in bonds, 157“158
The Paper Chase, 163
buy what is unloved, 53“55, 58
Papua New Guinea, 94“95, 102
challenging conventional wisdom,
“The Past Explains the Present” (Tooby
53“55, 279“282, 283“284
and Cosmides), 235“236
Index 307



fixed-rate loans, 221“223
conservative investment position,
housing bubble, 203“210
258“259
housing prices, 194, 196“199, 204,
dollar-cost averaging, 250“252
209“210, 223
emotional intelligence (EQ), 286“287
inflation and, 200, 201
emotional response control, 58“60,
interest rates and, 211“213
243“246, 284“285
investment characteristics of,
financial reserve, maintaining a,
200“202
258“259
investment in, 193“196
ignoring information, 252“254
leverage, 213“216, 223“224
key to, 230, 231, 283“286
local conditions and, 202“203
loss aversion, 29“30, 249“250
own a smaller house, 220“221, 271
low-risk investments, 270“271, 282
P/E of houses or property, 199“202,
mast-strapping, 260“262
204
own a smaller house, 220“221
rental vacancy rate, 207“208
plan, sticking to a, 285“286
return on, 220“221, 223“225,
productivity and, 273“275, 276
265“266
real estate, 223“225
supply and demand, 205“207
red zone, don™t trade in, 262“264
taxes and, 200, 201
self-control issues, 259“262
win-win outcome, 220“221
stocks, 189“192
Real exchange rate, 121
tips, 246“248
Red zone, don™t trade in, 262“264
trades, frequency of, 245“246, 248,
Reminiscences of a Stock Operator, 247,
261“262
249
Profit growth, limits on, 177“180
Rental rate(s), 200
Progenics Pharmaceuticals, 150, 274, 275
Rental vacancy rate, 207“208
Psychohistory, 272
Repin, Dmitry, 60
Purchasing power parity (PPP), 132

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