A friend of ours once went along to one of those time-share sales pitches, enticed by the free luggage on offer. After she listened to the spiel, politely declined and asked for her luggage, the agent blew up at her. 'You are so stupid! How can you pass up such a great deal!' We much prefer the approach of Ajay Kapur, the Asian strategist at Morgan Stanley. In the past year Mr Kapur has been telling his clients what a deal most of the Asian markets are, especially the region's worst performer, Hong Kong. Last week, he wrote a piece examining why investors were not listening. Conclusion: They were stupid. Maybe he did not actually say the word stupid - but he did use a graphic of a human brain that was captioned 'Why investors buy high and sell low'. The purpose of Mr Kapur's piece is to explain the science of the herd-like behaviour of fund managers. The brain, he says, is divided into three parts (as if we are checking). The stem controls primitive needs such as survival and territoriality; the mammalian limbic system controls emotion and social bonding; the outer-layer neo-cortex drives ideas, inventions and logical thinking. It is the limbic system, Mr Kapur has deduced, that makes us 'sell low and buy high'. The neo-cortex is employed when studying for an MBA or CFA degree. If you listen to this part of your brain, it will tell you that 'buying stocks at a price to book of 10 times with single-digit return on equities is not a good idea. That buying Asian equities at record low valuations probably is a very good idea'. Unfortunately, the limbic system is faster than the neo-cortex. As Mr Kapur explained: 'When in danger, you run first, reason later.' The limbic system is also responsible for crowd behaviour, which in the investment business allows the fund management community to agree that a price-earnings ratio of 200 sounds just right for an Internet stock. Mr Kapur offers a six-step programme to save investors and the broader investment banking community from their brains. Scrap investment committees - 'group hug behaviour' - and develop a system to recognise, dissect and negotiate investment bubbles. The chief investment officer should be a devil's advocate, not a cheerleader. Contrarian ideas should be disproportionately awarded if right and only moderately penalised if wrong. 'The pay-off for the natural tendency for consensus thinking should be small but large for the difficult contrarian thinking that fights the powerful limbic system,' he said. After pointing out the deficiencies of his clients' brain functioning, Mr Kapur ended his study by wishing them a Merry Christmas. Then he raced off for the holidays - presumably not at a time-share.