How to Profit from the New Science of Irrationality

In The Karate Kid, our hero soon stops waxing cars and begins competing. Similarly, the focus of this book starts with irrationality, but then quickly applies the lessons to the most important issues facing investors- the health of the economy, budget deficits, productivity, savings, inflation, the trade deficit, bonds, mortgages, stocks, and real estate.

The first section summarizes the key findings of the science of irrationality. We review the evidence that even the smartest of people make systematic mistakes. These individual quirks create manias and panics, and markets that are far from rational.

The second section is a primer on the economy, inflation, and the value of the U.S. dollar. Will U.S. budget deficits hurt the economy? Can the productivity revolution allow us to be richer and lead better lives? How will the decline in the U.S. dollar affect investors? When will the dollar decline end? Is the Federal Reserve creating inflation? Why would anyone be worried by prices being too low?

In the third section, we apply our analysis to the most important investment decisions we face. Are interest rates going to rise substantially? Has the bull market in stocks returned, or is the early twenty-first century stock market rally a trap? Is there a housing bubble?

Our analysis culminates in the final section that provides specific investment advice. An understanding of the lizard brain provides a timeless blueprint for effective and low-stress investing. Furthermore, we reach a timely and unexpected answer to Adams question on where to invest.

The lizard brain will be a leading character throughout our journey. Are there really $100 bills on the financial sidewalk? The answer is yes, but they are found in financial blind spots created by the lizard brain. The new science of irrationality shows us how to see into those blind spots so we can grab those $100 bills and improve our investment returns with less stress.