At least in principal you might think that if you could divorce yourself from day-to-day emotions you would do well in the market. Still, at the end of the day you have to interpret the numbers through either historical data or your brain. It is not obvious to me that you can escape the lizard brain by using quantitative analysis, but it is probably worth a try.

The only way to outperform the market is to take on more risk. Bonds—at least investment-grade ones—are for wimps.

I remember so clearly a day in the early 1980s when I was sitting in a crummy little apartment on the beach in San Diego, reading in a magazine that I should buy the current crop of U.S. dollar-denominated long bonds, which were a bet on Ronald Reagan. I thought, “This is idiotic advice. Land is going up, Postimpressionist paintings are selling at record highs; who would ever waste their money on these stupid bonds?” They produced tremendous gains year after year, with almost no down years. My lizard brain won that time; I did not buy them.

If in 1980 you had thrown darts at equities, bonds and real estate, you would have made money. So the lizard brain is telling us that to be rich in America, take risks, and when times are bad, hang on, risks will be rewarded. I do not mean to say we have a gloom-and-doom scenario ahead, but planning for a booming economy is not prudent.