Harvard economics professor, I have studied one central question: Why do people have problems in so many areas, ranging from food to sex to money? My search for an answer has taken interesting turns, including studying negotiators testosterone levels and living at a research station in Africa to learn from the behavior of wild chimpanzees.

An important source of our problems, I have become convinced, is that we are built to solve the problems faced by our ancestors. Because modern industrialized society differs systematically from the world of our ancestors, we tend to get into trouble. In my first book, Mean Genes, Jay Phelan and I investigate how the human brain-shaped in the Pleistocene-contributes to obesity, drug addiction, and poverty.

Mean Markets and Lizard Brains is a much more detailed look at one of the topics from Mean Genes. What mistakes do people tend to make in financial markets, and what can investors do to improve performance? Both book titles start with mean because each addresses areas of our lives where our instincts push us towards failure. It is a central feature of industrialized life that our passions conflict with our goals. Because of this, the world can sometimes seem mean.

Markets can be mean to investors who buy when excited and sell when afraid. Because we are built for a very different world, our instincts tend to be out of sync with financial opportunity. Consequently, making money requires understanding and shackling that part of our brain that pushes us to make costly investing decisions. This lizard brain, which we all have lurking underneath the more cognitive parts of our brains, is great for finding food and shelter, but terrible at navigating markets.

Mean Markets and Lizard Brains thus provides an answer to my question from two decades ago. Markets are irrational because of quirks in human nature. Those who understand this and harness the lizard brain can convert mean markets into money.

Acknowledgments

Jay Phelan and I have spent 10 years discussing and writing about the mismatch between Pleistocene brains and modern industrial societies. As is the case in such collaborations, most ideas are joint products. Beyond shared credit for the general concepts underlying Mean Markets and Lizard Brains, Jay deserves specific credit for aspects ranging from structure to style that are drawn from our coauthored book, Mean Genes.

Many friends donated time reading drafts and providing crucial feedback. Doug Bodenstab has read and critiqued every chapter (some of them several times). Chris Corcoran has similarly been involved at each stage, bringing his physicists intuition to the books underlying mathematics. Jon Goldberg applied his common sense, depth of trading experience, and apt analogies from the world of golf. Jay Phelan asked the tough questions and often supplied the answers.

In addition, others who read part of the book and made substantial contributions include: David Bear, Jeff Bodenstab, Peter Borish, Jane Burnham, Thomas and Marie Burnham, Judith Chapman, Adam Chec-chi, David Epstein, Brent Flewelling, Sue Flewelling, Lisa Gosselaar, Paul Greenberg, Brian Hare, Justin Holtzman, Matthew Mclntyre, Michael Schwartz, Joel Smith, Martin Stapleton, Scott Stephens, and Sadek Wahba. Danielle Lake did a fantastic job of copyediting the manuscript.

x Acknowledgments

Pamela Van Giessen, my editor at Wiley, deserves fundamental credit. From conception through writing and publication, Pamela has provided the support and the vision to create a book that is both deeply practical and academically rigorous. And thank you to Peter Borish for introducing me to Pamela.

Throughout every stage of the books development, my wife, Barbara Li Smith, has been a steadfast supporter and constantly pushed me to make the work fun. Her thoughtful advice and unselfish help made the book possible. And finally, our beautiful new baby, Charlotte Valentine, has provided daily inspiration.

Thank you all. Terry