Wise decision-making is essential to helping clients manage their portfolios. Daniel Kahneman, the 2002 Nobel Prize winner in economics and the author of the best-seller Thinking, Fast and Slow, tells contributor Michelle Lodge how both emotional and deliberative thinking figures into the client-advisor relationship.

1. Tell us. What is "fast" thinking? Fast thinking is the first impulse that comes to your mind-an emotional reaction to something that is attractive or unattractive. Here's an example: Many years ago I visited a chief investment officer of a large financial firm, who had invested tens of millions of dollars in shares of Ford Motor Company after having been to a car show. I found it remarkable that he had apparently not considered whether the Ford stock was currently underpriced. Instead, he listened to his intuition, or fast thinking: He liked cars, he liked the company and he liked the idea of owning its stock. In investing, the best attitude to have is one that mutes the emotional.

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