The DNA contained within each of your cells carries the biological instructions needed to make you, you. Researchers call this complete set of DNA instructions a “genome.”
At the DNA level, small variations in our genetic code make each of us unique. Genetic variations determine the color of our skin, influence our risk of disease, and even affect our investment style.
INVESTMENT STYLE: 30-40% GENETICALLY PROGRAMMED
Behavioral neuroscience research has identified several genetic variants that influence perceptions about financial risk.
Researchers at Northwestern University, for example, showed that carriers of the 5-HTPLLR genetic variant perceived stocks to be excessively risky and experienced high anxiety when faced with investment decisions involving potential losses. (1)
A common monoamine oxidase-A (MAOA) gene mutation has been associated with greater risk appetite along with greater liklihood to make profitable financial decisions. Even one’s tendency to hold out for a higher return appears to be underpinned by genetic variance. Reuter et al. found that two genetic variants (ANKK1-DRD2) work in concert to effect one’s emotional response to unfair offers, making an investor more likely to reject low bids. (2,3)
TRUE INSIDER INFORMATION
From why you chase hot stocks to why you’re so quick to close winning positions, your genetic analysis will reveal inate tendencies that unwittingly sabotage your investment potential. Focused on reducing emotion-based decision making, our analysis surveys variations in the genes reported to impact investment-related decisions, including genotype-phenotype studies on:
- Loss aversion – a hypersensitivity to potential losses that, in the long run, reduces returns
- Anchoring – overweighting one piece of information or even a small subset of the wrong variables
- Framing effect – the tendancy to be risk-averse when facing gains, but risk-prone when facing losses
- Delay discounting – shortsightedness and a preference for immediate payoffs that often leads to regret
- Decision latency – a cognitive skill that involves slow, but not reflective, thinking and relies upon focused attention
- Reuter M, Felten A, Penz S, Mainzer A, Markett S, Montag C. The influence of dopaminergic gene variants on decision making in the ultimatum game. Front Hum Neurosci. 2013 Jun 4;7:242.
- Wallace B, Cesarini D, Lichtenstein P, Johannesson M. Heritability of ultimatum game responder behavior. Proc Natl Acad Sci U S A. 2007 Oct 2; 104(40):15631-4.
- Dohmen T, Falk A, Huffman D, Sunde U, Schupp J, et al. Individual risk attitudes: measurement, determinants, and behavioral consequences. Journal of the European Economic Association 2011: 9; 522-550.