The best example I can give is, I was making a speech about the book in Edinburgh, Scotland, and I was at one of the largest global equity managers in the world, and I put up a slide about these forms of unconscious bias. All the Scots in the room were chortling: They couldn't believe how stupid Americans are, and that anybody would actually do something like this was just beyond them. Then the chief investment officer of the firm said, ''Well, what about ...?'' and he named a stock that this firm is heavily overweight in. It turned out the ticker for the firm they're overweight in matches the firm's own initials. He said, ''I'm very glad that you pointed this out because I never would've realized it. We probably do have an unconscious bias and now we're aware of it. Now maybe if the time ever comes that we need to sell that stock, we can make a more objective decision.''

So people do stuff like that all of the time, and I'm prepared to bet that if we did a survey of all equity fund managers within America and we simply found out the eye color of all the managers and we then went and looked at their portfolios, we would find that UPS is over-owned by brown-eyed managers and Jet Blue is over-owned by blue-eyed managers. I haven't done this research yet, but I am very confident that that hypothesis is a good one. This is something that investors need to be aware of: Active managers may think they are choosing stuff for one reason, but actually it's almost as if the choice has been made for them by unconscious biases they don't even realize they have.

JoI: Stock analysts frequently develop relationships with and visit the companies they cover. Do you think that familiarity makes them more predisposed to recommend it?

Zweig: Absolutely; no doubt about it. One of the oldest and best-documented quirks in human psychology is something called the halo effect, wherein if you rate one quality or aspect of a person or thing, all your subsequent ratings of all the other aspects will be colored by the first one.

So if, for example, you were to rate me on a scale of one to five on how handsome I am, you can then later rate how intelligent I am, how articulate I am, how wealthy I am, how positive I am. All of those judgments will be skewed toward the initial judgment of how handsome I am. And by the way, that's true whether your rating was high or low. So if you said, ''Well, no, Jason isn't handsome at all,'' then I wouldn't be very articulate either and I wouldn't be very intelligent. If you said I'm very handsome, then you would be much more inclined to rate my intelligence higher, my overall presentation higher, all of those things.

One of the most amusing studies in this field comes from high school teachers: Psychologists took an answer to an actual essay question written by a real high school student and made hundreds of photocopies of it, and distributed them to real high school teachers with the student's name in the upper right-hand corner. In some cases the student was named David, and in other cases he was named Hubert. In some cases she was named Lisa, and in other cases she was named Bertha. David and Lisa, on average, got grades 10 percent higher than Hubert or Bertha, because having a nice name casts a halo over the quality of the work. And people are totally unaware of this. They don't realize that they're responding to a halo effect, but they are.

One thing that people who buy index funds can take a lot of comfort in is that by definition, an index fund should not be influenced by unconscious bias, and overall, that should be a good thing over the long run.

JoI: What do you think are the most important advice or findings in the book that investors should really focus on?

Zweig: If I had to boil it all down to one thing, it's you need to be more mindful as an investor. That means you need to keep better records of your decisions; it means you need to be more introspective and more retrospective. You have to look back at how your decisions have worked in the past; you have to think more carefully about the decisions you're making in the present.

And I guess if I had to boil it all down to one rule, it would be if the market is open, your wallet should be closed: If you get the idea today, you should not actually do it until tomorrow. Because if you sleep on it, you may wake up the next morning and your mood may have changed, the data may have changed, you may just see things in a different light. It's quite rare, unless you're a short-term trader, for anything significant to change overnight that would leave you worse off, but you might well make a much better decision if you'd just wait until the next day.

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