Your Money and Your Brain

Books Worth Reading

June / July 2008 By: Rolf Dobelli Volume 6 Number 3

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Your Money and Your Brain

Conventional wisdom suggests that investors are rational analysts who work hard to understand how their investments will perform. The assumption is that the more you understand, the better you will do. Actually, ample evidence shows that knowledge and understanding do not necessarily correlate with investing success.
In Your Money and Your Brain, Jason Zweig suggests that the human brain does not make financial decisions strictly on the basis of knowledge, reason and study.
Myriad emotions are also at work, including surprise, happiness, fear, risk and greed. However, the author believes your feelings and instincts can work in your favor. For example, if your gut warns you against trusting someone, pay attention to it. Intuition allows you to process behavioral cues that logical analysis may miss.

Feelings, such as anticipation, can affect the stock market in strange ways. For instance, when a company declared that it had begun to sequence the human genome, its stock soared. But when it announced a year later that it had completed the sequencing, the stock collapsed. What happened? Perhaps nothing more than an end to anticipation. To temper your expectancy, understand that nothing is certain in the market. Familiarity and overconfidence often mislead investors. Admit what you don't know. Follow the example of Warren Buffett and ignore investment proposals that you do not understand. Keep a diary of your investments and track whether performance correlates with your emotions. The log will help you learn from your mistakes.

Jason Zweig tackles two daunting subjects—€”finance and neural research—€”and manages to make both of them accessible and interesting to a general audience. This book is not the first to apply the lessons of cognitive and behavioral research to personal investing, but it is among the most comprehensive, credible and clearly written of such books.

Jason Zweig. Your Money and Your Brain: How the New Science of Neuroeconomics Can Help Make You Rich. Simon & Schuster, 2007. List Price: $26.00. ISBN-13: 978-0743276689.

Know-How

Leadership is a messy phenomenon," says Ram Charan in his book Know-How. Given the reality of the modern world, business schools and management training programs should offer a class called: "Business Savvy 101: An Overview of Hidden Agendas, Power Struggles and Other Leadership Challenges." Fortunately, Charan's book is a tutorial on that subject. Charan is a business adviser for global corporations. He acquired a valuable business lesson from a very humble mom-and-pop business in India—€”his family's shoe shop. The lesson was simple: If there's no money in the cash register at the end of the day, there will be no dinner. That's the basic "know-how" of every business, no matter how small or large. Savvy corporations can fill their coffers with cash because they constantly tap into clients, market trends and global opportunities. Eight essential tools separate business leaders from boardroom failures and mediocre players. You need to "know how" to position yourself successfully in the market and to take immediate action in case of failure; how to keep abreast with changes and trends in your business environment; how to manage personal relationships and in-house social networks to create an atmosphere of productive communication; how to act as a talent scout to nurture new leaders; how to provide a work environment in which people understand the "big picture" and their role in a larger view; how to find the right mix of short- and long-term goals; how to prioritize these goals and, lastly, how to stay tuned-in to the gossip and rumblings of special-interest groups, political committees, regulators and Wall Street investors.

Charan provides excellent insights for aspiring executives and current leaders. Granted: Not all of his points are that new, some are too commonsense to be inspiring, some are repetitive and some may be distinctly familiar to readers of his previous books. Nonetheless, these faults are far outweighed by the value of Charan's concrete examples from brand-name companies and entertaining stories.

Ram Charan. Know-How: The 8 Skills That Separate People Who Perform From Those Who Don't. Crown Business, 2007. List Price: $27.50. ISBN-13: 978-0307341518.

Red-Hot Cold Call Selling

Picking up the phone and calling a prospect seems like a natural thing for a sales professional to do. Yet, even the best, most seasoned salespeople avoid cold calling to steer clear of rejection. Paul S. Goldner, author of Red-Hot Cold Call Selling, teaches you how to dispel your fears and shows you that it is really just a numbers game: A certain number of calls will produce a relative number of appointments and sales. Prospecting is the best sales activity in which to invest your time and allows you to take control of your sales practices and determine your income.

Goldner believes that the telephone remains the best vehicle for making new contacts. However, many salespeople are reluctant to cold call. He suggests overcoming this dread by adjusting your preconceived notions regarding rebuffs.
View them as simply a part of the process. A "no" now might mean a "yes" down the line. He also recommends concentrating your efforts on those who are ready to purchase your product, and returning to the others later. Remember, the objective of the cold call is to arrange a face-to-face meeting. Don't attempt to sell your product over the phone. Try these tried-and-true tips from the author: Schedule a prospecting hour each day. Make as many calls as possible; keep them brief and informative. Prepare a list of names before you call and rehearse what you will say. Vary your call times and consider off-peak hours. Imagine a sale before you begin and keep up contact once it is closed.

Goldner thoroughly covers every aspect of prospecting, including identifying the best times to call, defining your target market, writing a cold-call script, handling objections and getting past voice mail. His process will inspire even the most reluctant salesperson to dial that cold call. Although it does not bring anything groundbreaking to the table, this manual makes a fortifying read for anyone whose income depends on bringing prospects into the sales pipeline.

Rolf Dobelli is chairman of getAbstract, a provider of book summaries.

Paul S. Goldner. Red-Hot Cold Call Selling: Prospecting Techniques that Really Pay Off. Amacom, 2006 (2nd ed.). List Price: $17.95. ISBN-13: 978-0814473481.