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  1. #1
    AlfredCaw Guest

    Default Why ‘High Intelligence’ is a Handicap to Profitable Investing

    “Our A students become professors. Our B students go to law school. Our C students rule the world.”

    — Henry Rosovsky, Former Dean of Harvard College

    In writing my monthly newsletter, Smart Money Masters, I get to look inside the minds of some of the world’s leading investors.

    Although many of these folks are smart by most conventional measures, few, if any, of them are “Oh my God!” smart.

    My best friend from high school had that kind of smarts. He became a theoretical physicist and has worked in an anonymous government lab for his entire life on projects he can’t discuss.

  2. #2
    Alfredcoola Guest

    Default

    As it turns out, the world’s greatest investor agrees with this view of raw IQ as it applies to investing.

    Warren Buffett has pointed out that you don’t need to brilliant to be a great investor. Buffett said:

    “Success in investing doesn’t correlate with IQ once you’re above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.”

  3. Default

    I will go a step further.

    I believe that high intelligence is a hindrance to successful investing.

    That’s because highly intelligent people want to be 100% right. As a result, they have a tough time admitting that they are ever wrong.

    Brilliant people also put a lot of thought into their decisions. No wonder they form an attachment to their models of reality and are reluctant to let them go. They stick to their guns, even when the market tells them otherwise. Moreover, they act with “righteous indignance” when someone challenges their model of reality.

  4. #4
    AlfredMari Guest

    Default

    Having dropped out of college, neither the founders of Microsoft or Google could have gotten a job on Wall Street, let alone taught at a top business school.

    Street Smarts Trounce Book Smarts

    Financial trading offers a perfect example of how conventional measures of intelligence are irrelevant to success.

    The market does not care where you went to college. It does not care what your grades were in statistics class. It does not care about the valuable connections you made in business school.

    Financial markets deliver constant feedback on your investment thesis against an objectively measurable result.

    At the start of my investment career in the mid-1990s, I spent three years studying at the knee of one of the United Kingdom’s leading investors.

 

 

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