The Psychology of Making Money

http://beta.personalityzone.com/view/blog/psychology-and-making-money.html
I posted the article below as a guest author at PersonalityZone.com, a startup that I've recently funded. Personalityzone is a pretty cool, because it allows content to be customized based upon personality type.
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The goal of investing is to accumulate wealth.

However, the practice of investing is an exercise in cultivating self awareness. Knowing your own personality type and your how this effects your investing behavior can make the difference between sustained success and flaming out as you pursue your financial goals.

What does psychology have to do with making money? In short, almost everything. Most investing advice begins with something that tells you how to think about something. Changing your thinking requires an awareness of not only how you currently think, but an ability to be self aware, in the moment, to recognize unproductive thought patterns. Investing also requires mastery of the animal instincts—fight or flight—and their emotional manifestations—fear and greed. The emotions can have a strong impact on the outcome of otherwise objective, analytical judgment. Understanding how emotions color judgment can not only help you avoid cognitive errors, but also allow you to capitalize on such errors when they are made by others.

Through evolution, our brains are wired at the core (the amygdala to be exact) to respond rapidly to threats and opportunities. The amygdala triggers an emotional override of the rational brain because reflexes respond much faster than the slow process of cognition. Recognizing this mechanism and delaying a decision until the emotions settle and there is time for contemplation distinguishes the rational investor from the trader.

It is interesting that the amygdala also has a central role in memory processing. It ensures that memories associated with pain and pleasure are disproportionally burned into long term memory. This was an advantageous evolutionary adaptation when we needed to remember where the saber tooth tiger lived or where to locate food or a mate. However, this feature is a maladaptation when the brain is used to invest. It causes us to remember the painful loss on a bad investment far more than the steady, unexciting returns generated across the rest of the portfolio. In fact, psychological studies have proven that one dollar of financial loss is equivalent to three dollars of gain. Such asymmetry in psychological response to a quantitative event can create inefficiency in asset prices in times of crisis. Fortunately, we have the benefit of computers and historical datasets that represent a much better history of the facts than we can remember. However, it is incumbent on the investor to objectively look at the data and not bias it with their emotionally colored memories.

Recognizing the mistakes that our brain may create in the investment process is the first step in transcending its limitations. While the brain may not change in its physical form, we can reprogram it through the effort of conscious thought. With such mindfulness in practice, the rational investor can gain an advantage for accumulating wealth by recognizing opportunities that others do not. Being centered is the secret to buying low and selling high.

Signs the Dollar is near the bottom...for now

Gisele Bündchen is said to be keen to avoid the US currency because of uncertainty over its strength.
http://news.bbc.co.uk/2/hi/business/7078612.stm
When nonsense like this gets press, it raises the likelihood that the trend is likely played out.

Wiki Mind Map --UI for Wikipedia

I’ve found Wikipedia.org to be an extremely useful research tool. However, I’ve found something even better:

http://www.wikimindmap.org/

This site will create a “mind map” of a Wikipedia topic. The value of this map is that it provides a visual representation of the topics that are adjacently related to your primary search phrase. This reduces the amount of time it takes to find what you were actually looking for. It also increases the chance you will notice a related and relevant topic that you were not anticipating.

The Earth is Expanding

The following video makes a case for the idea that the diameter of the Earth is expanding. http://www.youtube.com/watch?v=VjgidAICoQI&mode=related&search . What's not mentined in the video, is the observed evidence that supports such a theory--the slowing of the Earth's rotational rate, which is observed to be decelerating at about 2 milliseconds per day per century --

http://geology.about.com/gi/dynamic/offsite.htm?site=http://maia.usno.navy.mil/eo/leapsec.html

The deceleration of the Earth's rotational speed is caused by the conversation of angular momentum--mass stays the same, diameter increases, so rotational velocity must decrease.

Given how much the diameter has increased from dinosaur days, the cross-sectional area of the Earth as viewed from the sun would have increased significantly. This increase in thermal flux would result in an increase in the temperature of the Earth, all things being equal. This change in thermal flux over time may help explain a lot of open ended questions about the history of the Earth's climate.

Sun/Opteron 4x cheaper than Bluegene

Simon Bullen's Weblog : Weblog
Nice comparison of supercomputing performance. Sun is 4x more cost effective than IBM's bluegene, plus you have ongoing savings in the maintenance. It looks like the difference is driven by the difference in number of processors, which could be attributed to the parallel intensity of the test program. However, it does raise some interesting questions about the economics of grid computing.

MSFT sticks a fork in OpenOffice

Jensen Harris: An Office User Interface Blog : Licensing the 2007 Microsoft Office User Interface: "There's only one limitation: if you are building a program which directly competes with Word, Excel, PowerPoint, Outlook, or Access (the Microsoft applications with the new UI), you can't obtain the royalty-free license."

I wonder if the DOJ will take issue with this? So much for Office embracing open standards.

Ballmer on Novell, Linux and patents

Ballmer on Novell, Linux and patents: "Linux comes from the community -- the fact that that product uses our patented intellectual property is a problem for our shareholders."