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Finance has both these raw ingredients. Most traders’ brains harbour the impatience gene. Often, they harbour little else. And traders’ behaviour is shaped every bit as much by the footfall of their friends in the herd. So, in theory, we might expect similar cycles of selfdestruction and self-improvement in finance. Gresham’s law in finance To illustrate these theoretical dynamics in action, consider a sketch model. Imagine three classes of investor:   an impatient short-term speculator, who follows the momentum of the herd, buying when prices are rising and selling when they fall;    a patient long-term investor, who invests according to where prices are relative to their long-term fundamentals;    an untested investor, who can mimic either the speculator or the long-term investor, but whose performance either way is assessed at frequent intervals by endinvestors who withdraw or maintain funds accordingly. Market prices in this model are buffeted by two winds. Momentum-based speculators cause deviations from fundamentals, while long-term investors drive prices back towards fundamentals. These are the double-selves of the financial brain, the patience and impatience genes. And as in social systems, the balance of these two genetic types results in two very different evolutionary equilibria. Under one equilibrium, patience wins the day. When long-term investors start in the ascendency, prices tend to correct towards fundamentals. The performance of untested investors pursuing momentum strategies falters, while those pursuing long-term strategies flourish. The fraction of long-term investors rises. The self-correcting tendencies of market prices are thus reinforced, further supporting long-term investors.