Unconscious choices

We now understand that more than 95% of human cognition occurs in that part of the brain referred to as the unconscious brain. This means that the vast majority of the thoughts we have, decisions we make, even the actions we take are developed completely in our unconscious. Much like the time-honored metaphor of the iceberg, the reasoning for much of what we say and do is hidden from conscious exploration.

As a result, the end product of our cognitions often bursts out into the world as fully formed ideas, opinions, conclusions and events. And, this happens with little or no involvement of our conscious thinking.

What allows the unconscious to be so formidable is that it is where we store our beliefs, values, rules-of-thumb and biases. In turn, these act as cognition accelerators and once they are stimulated by an image, word, sound or market data they rush us to a conclusion. Science has shown that the unconscious has the power to drive us to act or make a decision well before our consciousness is even aware that a need to do something exists.

Decisions made by our unconscious account for much of what is observed in Behavioral Finance. The persistent tendencies we exhibit which result in buy/sell actions outside of our advantage are due to the 95% of cognition that occurs unconsciously. It is precisely because these decisions and actions are motivated without conscious knowledge that we can not scrutinize or manage them by mere observation or hindsight.