Having Guts Could Solve All Our Economic Problems

2013-10-08-Confidencecroppedtop.jpgWhen I played soccer in college I noticed there was one thing every one of my teammates had in common. They all had confidence. After the long years of learning the essential skills we all needed to be able to play at a college level, we turned off the part of our brains we used to hone those skills and just played. Most call it muscle memory, (which is part of it) but it's also more than that. It's knowing when to let your subconscious take over at the right times. After gaining the essential skills from long years of training, a good athlete focuses on structure, positioning, and making good decisions. The best athletes stay composed and use their gut instinct. The same can be said for executives, economists, doctors, and all masters of their trade, and here's why:

Researchers at Virginia Tech actually found more evidence that a spike or decline in chemical dopamine (the chemical in your brain that makes you feel happy) is your gut feeling, and that it is right more times than your conscious mind is.

The test started when a microsensor was safely inserted into a patient's brain. From this, the researchers were able detect a decline or increase of dopamine levels within microseconds of it transpiring. The patient was then placed in a simulated stock market game where a brief history of the stock market was shown. Subsequently, he was then asked to trade a portfolio valued at $100. The study showed that the spike or decline in chemical dopamine 5 seconds prior to showing the performance of the market was great indicator of future market activity.

In other words, when the researchers invested 100 percent of his portfolio when the patient had a spike in dopamine and 0 percent when he had a decline he more than doubled his performance in the stock market, totaling an 175 percent increase in portfolio value.

Your conscious mind cannot access all the information stored in the subconscious mind. However, dopamine plays an effective role in what most believe to be an emotional reinforcement to learning and decision-making. It connects parts of the brain that could not be accessed without it, and as you can see, can provide results that are much better than you may have received prior. Dopamine "may be" your gut instinct, however, the stock market is NOT a good place to start testing that gut instinct. In fact, no person on this planet can make market decisions based off of gut instinct (except for the researchers at Virginia Tech). The major takeaway from this article is that hard-earned, keen skills are required in order to have a reliable gut instinct. Until you have a permanent helmet transmitter attached to your head that tells you how to make decisions based on dopamine levels, you're going to have to gain more knowledge before making decisions. Yet, even the most educated individuals can doubt their instincts when making simple decisions. Don't be afraid to go with your gut if you did your homework. Otherwise, you're not utilizing your secret weapon. On the contrary, don't use your gut feeling when you're not knowledgeable on the subject.