Are you a “numbers person” or more the “artsy type?” According to the left-brain right-brain dominance theory, one hemisphere of the brain is more dominant, and this, in turn, determines the way you think, how you feel, and what you find interesting. It’s also largely a myth.
It is true that each hemisphere activates the opposite side of the body but there is little medical evidence to support that one side of the brain is responsible for our personality or thinking patterns. In reality, the different sides of the brain work together, simultaneously. Critics believe this classification of abilities is dangerous and leads people to believe that, due to genetics, they are either fill-in-the-blank inclined or not. A related, and harmful, myth is investing is only for the wealthy, the mathematically-inclined, or those with a passion for studying finance.
A wonderful thing about the world of investing is that no matter your interests or the way you approach a problem, there is a niche for you. Left-brain, right-brain, or whole-brain—it doesn’t matter, investing can be interesting and approachable to everyone.
Characteristics often associated with left side of the brain include decision-making ruled by logic; level-headedness over emotional impulses; a preference for itineraries; and an analytical style of thinking. “Left-brained” individuals are drawn to math, non-fiction, and the mechanics of the special effects in Blade Runner.
But it can be hard to differentiate between “left-brained” traits being the cause versus the effect of this behaviour. For example, people who really like math are more likely to go into the STEM disciplines, and have thus been conditioned to think analytically and objectively. One side of the brain does not determine your abilities. However, it is a tidy way to group people based on what interests them and the ways they think.
Conversely, a rightist would base their decisions on intuition and emotion; favour spontaneity to schedules; easily read into others’ emotion; and be more interested in the symbolism of Denis Villeneuve’s new film.
So with those traits, what aspects of investing would left-brained individuals find particularly interesting or be well-suited for?
- Analytical thinking is a trademark of the left-brained. It involves breaking down complex problems into smaller parts and then coming up with an overall solution. This way of thinking is particularly well-suited for the quantitative elements of fundamental analysis—one of the two major schools of investing analysis. Fundamental analysis involves examining the underlying forces that affect the well-being of the economy, industries, and company. Analytical thinking can be useful when it comes to breaking down the financial health of a company, such as valuating and modelling future revenues and profitability from an income statement, understanding debt obligations from a balance sheet, or a company’s ability to pay for its operations and future growth from a cash flow statement.
- Risk management is often touted the first step of making money—not losing money. A penchant for objectivity and logical thinking helps the “left-brained” look at investment decisions with a lens of mitigating risk. This might include calculating possible investment losses, diversification, using certain hedging techniques like options, or conducting thorough due diligence.
- If you find joy in the details you may also find joy in technical analysis—the other major school of analysis. Specifically, technical analysis is the statistical analysis of past prices, volumes, and other market data to forecast future price movements. From this analysis, patterns can emerge and a trader can set up indicators to hopefully inform them of possible price ups and downs. It requires a certain excitement for details to sort hints from all of the trading activity and then support them statistically into an actual trading strategy.
“Left-brained” individuals are known for their organized approach and focus on the details. However, big-picture thinking can only better inform the investment decisions you might have arrived at using a more analytical approach. One strategy for developing a holistic view is to take into account the perspectives of different stakeholders. Put yourself in the customers’ shoes, the competitors, the executives, the sales team, other investors, anyone and everyone.
South African scientist, Lyall Watson, has a quote as profound as it is apt, “If the brain were so simple we could easily understand it we would be so simple we couldn’t.” The brain is an enigma, and as far as science can tell, we’re not born more mathematically or artistically inclined. So if you’ve long considered yourself “left-brained,” don’t be afraid to think abstractly or develop your abilities to read others’ emotions. And if you thought investing was only for those with a natural talent for it, then hopefully you now recognize the many facets of investing and where you too can thrive.
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