Is Your Investing Personality in Your DNA?

I consider myself a patient and disciplined investor, so I volunteered as a guinea pig in Ahmad Hariri's imaging genetics lab to learn how my genes and brain activity shape my behavior. The results shocked me.

After I spit into a cup, Dr. Hariri had my DNA analyzed to find out which form I have of five genes that influence the brain circuits that generate decisions about risk and reward over time. His findings: In all five genes, I have a variant, or allele, that is sometimes associated with bad investing decisions.

Consider the FAAH gene. Roughly 25% of people with European ancestry carry the 385A allele of this gene. That tends to damp their brains' fear circuitry and to intensify their brains' reaction to the prospect of making money. I am one of those people.
Or take the DRD2 gene. Some 20% of Caucasians have an allele that can make them respond more intensely to gambles, even when no skill is involved. I have it.

When I had my brain scanned with a functional magnetic resonance imaging, or fMRI, machine, that wasn't a pretty picture either.
While I lay inside the fMRI tube, I viewed a card face down and tried to guess whether it was higher or lower than a five. If I got enough of the guesses right, I was supposed to win $10. Whenever my guess turned out to be right, my ventral striatum -- one of the brain's reward centers -- responded roughly twice as intensely as that of the average person in Dr. Hariri's experiments.

That suggests I may get an even more visceral rush out of making money than other investors do. Dr. Hariri has found that people whose brains respond like mine tend to crave the immediate gratification of a quick profit. "Controlling this kind of impulsive response to reward," says Dr. Hariri, "is crucial to success in many aspects of life" -- like investing, where impatience often lowers returns.


There is always a tug of war inside each of us between nature and nurture. But during scary times like these, says Dr. Hariri, "environmental stresses can play a critical role in unmasking any underlying biases determined by your genes." In other words, bear markets give nature the upper hand. It is now harder than ever to stick to the disciplines that can override your genetic impulses, but it also has never been more important.