Heres what he said: I dont want you to get nervous if Im behind in the beginning, my strategy is to come from behind. Dont worry, Im going to win.

The race was three laps and-as Paul had forewarned-after one lap he appeared hopelessly behind. Confident in his certain victory, Jimmy started celebrating and gesturing to his fellow bullies in the crowd. On the final lap, Paul accelerated and easily passed a tired Jimmy.

John Maynard Keynes remarked that markets tend to stay irrational for longer than an investor can stay solvent. Therefore the investor who seeks to profit from irrationality has to anticipate being behind in the race for a long time. The goal, of course, is to have more money in the long run, not to be in the lead for a while.

Even the legendary Warren Buffett had to endure scorn during the late 1990s because he refused to buy bubble stocks. Buffett avoided overpriced stocks, which became even more overpriced before the bubble popped. Accordingly, he missed out on the ephemeral gains and many claimed that Buffet had lost his mojo. Buffets exceptional mental toughness allowed him to persist and prosper. Unlike most people, he never deviated from his plan.

Tame the Lizard Brain and Convert Mean Markets into Opportunity

Taming the lizard brain by following the Mean Markets and Lizard Brains advice is not easy. Quite to the contrary, it is very hard. The fact that making money is difficult is precisely what makes it possible. If it were easy to make money from others irrationality, then the opportunities would vanish.

Interestingly, financial success does not require fancy mathematical skills or genius level IQ. No, it requires something far more rare and difficult. To make money investors need what Dan Goleman labels emotional intelligence (EQ):

EQ is not destiny-emotional intelligence is a different way of being smart. It includes knowing your feelings and using them to make good decisions; managing your feelings well; motivating yourself with zeal and persistence; maintaining hope in the face of frustration; exhibiting empathy and compassion; interacting smoothly; and managing your relationships effectively.9

Goleman argues that attaining ones goals in life requires emotional intelligence more than IQ. Similarly, successful investing requires the extremely rare quality of EQ. To profit from market excesses requires self-knowledge, self-confidence, endurance, and mental toughness. The successful investor has to face ridicule and must live with underperfor-mance for extended periods.

Money won is twice as sweet as money earned, said Paul Newman to Tom Cruise in The Color of Money. Similarly, I find money gained through savvy investing to be far sweeter than wage income.

Markets are irrational, and our backward-looking, pattern-seeking lizard brains push us to lose money. Investors who let the lizard brain make financial decisions tend to buy at market tops and sell at market lows. Because our instincts are exactly out of sync with financial opportunity, markets can be mean.

However, it is the very irrationality of markets that provides the opportunity to make sweet profits. Financial success is based on using emotional intelligence to shackle the lizard brain. Fortunately EQ can be increased by diligence, introspection, and discipline. Therefore, any investor willing to work to understand and tame the lizard brain can transform mean markets into money and satisfaction.