In their classic book Why Smart People Make Big Money Mistakes, Thomas Gilovich and Gary Belsky looked at the psychology of financial decisions.

In his new book Your Money & You Brain, Jason Zweig goes a step further, looking at both behavioral economics and the neurological side of it. The result is a fascinating look at the tricks that our minds play on us, and how they keep us from investing as well as we could.

As Zweig writes, a mile long time-line of human history would not show the first financial markets until about four inches from the end. Evolution has given us brains that are very well-equipped for fleeing from gazelles but, alas, prone to a lot of stupid mistakes when it comes to investing. And this applies to "sophisticated professionals" as well as rank amateurs.

Extensively researched -- Mr. Zweig took part in numerous experiments -- this book will give you new and profound insight into how you think about money. Every serious investor should read this book, although few will because it offers no get-rich-quick scheme or concrete tips on how to beat the market.

But it's very readable and funny in parts, and definitely one of the more entertaining investment books to come out in recent memory.

Book review: Your Money & Your Brain originally appeared on BloggingStocks on Mon, 21 Jan 2008 17:31:00 EST. Please see our terms for use of feeds.