Guard against ‘cocaine brain’
‘Cocaine brain” is a term used by the successful Indian-American investor Mohnish Pabrai to describe a state of mind that he actively tries to dampen down. Apparently neuroscientists have found the prospect of making money stimulates the same brain circuitry as cocaine.
In such a heightened state, investors can forgo calm, rational analysis in favour of rash decisions. Decisions that may, as they say, be made in haste and repented at leisure.
Recently I’ve seen a few people who looked like they were in “cocaine brain” mode attending investment conferences. These were “quick pitch” events where a company’s representative (usually the chief executive) had 10 or 15 minutes to present to the audience. Many of them are skilled, charismatic
