Why people with high IQ prone invest failed?

In stock investment, temperament is the final decisive factor, not intelligence and IQ, nor the amount of funds. I certainly know that most people may disagree with my statement, but I’m just telling the truth that people don’t want to admit, let alone say.

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The world is rewarding high IQ people

In terms of work, reading, and research, no one can deny that smart and high IQ people do have an advantage. Because they are quick in thinking, strong in understanding, quick in response, accurate in judgment, and easy to get the first opportunity, they can defeat most people — because in these situations, smart and high IQ people can get rewards. High IQ is the key to success. These are also my other two blog posts “Why successful manager usually not a good investor? “And “Why the successful skills needed for stock investment is opposite of successful workplace skills“.

Opinionated

The most significant characteristic of a smart and high IQ person is self-righteousness, thinking that he is always right, despising others, and never hearing what they say–this is a great hindrance and unfavorable personality traits for investment. The problem is that such people usually don’t think they are so, and this is the danger.

Show off

People with smart and high IQ can easily point out the deficiencies of others, and can point out a bunch of mistakes or unreasonable points for the weaknesses of people or things, and therefore are easy to win the praise of society and peers. They are easy to obtain a favorable position, a smooth life, and enjoy all the benefits.

But investment is not science, there is no absolute right and wrong, there is no certainty, there has never been an authoritative and unique bible or guide to judge by, let alone a formula. The key to investment is to try to find a higher probability of success. The market is full of unknowns and risks. No judgment is impeccable and flawed, and there has never been any.

But the clever people who show off:

Find excuses for themselves, find excuses; do everything possible to blame others; because these behaviors are extremely easy for them to execute, specious, and seem reasonable.
Innately habitually point out the possibility of other people’s various failures, sarcastic, picky, and criticize others.
They are trying to left no stone unturned, finds out the unreasonable points in order to show his superiority and try to win praise.
Full of subjective contempt for the opinions of others, thinking that he is always right, always opposed to opposition; but unable to propose his own plan.

It is easy to refute all the opinions in this world, but the question is what is your own opinion? What is your factual basis?

Unwilling to devote

Most of the smart and high IQ people have a good understanding and work very smoothly. They have relied on their talents since they were born; for most things, they only need to pay less effort and attention than most people. Usually you can achieve better than most people in this society. This is an undeniable fact.

But everyone has forgotten one thing. Investors who can achieve great success in stock investment are almost all fundamental analysts. There has never been a technical analyst who can win the final long-term victory. On the road of investment and accumulation of assets, it is not just stock investment. Time and persistence are the only necessary and sufficient conditions. This applies to any method of asset accumulation, such as real estate, gold, and stocks. As long as it is a basic analysis, considerable effort is required.

Having a good intelligence, IQ and talent will have some advantages, but it is only a few advantages. In all things that require effort, time, and persistence, people with high IQ will not have an advantage. In my opinion, this will be a disadvantage — because people with good intelligence and talent will rely on it. Good understanding, usually not willing to spend too much effort on research, tends to make final arbitrary decisions with just a glance, and is always subjective. Famous author John Train once wrote, “Investment is the craft of the specific.”

The tragedy is yet to come. Generally speaking, people with high IQ are less willing to carry out boring, tedious, loney, long-term, and repetitive tasks. However, successful investment do requires boring, tedious, loney, long-term, and repeated basic corporate research indeed. There is no alternative–but smart people are almost unwilling to do these things, because from their bottom of heart they think that these things are the work of stupid people, and there will be better ways to get better pay and performance in investment, and there is no need to use this “stupid method” ─ ─ This is very fatal , The inner superiority is at fault; of course they will not admit it.

My personal view is that this is the main factor that makes the investment of smart and high IQ people unable to succeed. It is very unreasonable, very subtle, and most people will not pay attention to it, but it is indeed the root cause, but it is difficult for most people to perceive this, and they do not want to accept or face the importance of hard work.

Complacent

Smart and high IQ people have personality traits of arrogance, arrogance, and contempt, all of which can become fatal flaws in investment. Regardless of success or failure, investors should always have a humble heart towards the market. The reason is simple. The complexity of stock market investment exceeds the level of human imagination.

These characteristics will also lead to another consequence, that is, everything is arbitrary and preconceived, always thinking that he is the smartest and must be right, forming a self-centered way of thinking and doing things. Unwilling to think deeply, in his eyes, he always thinks that everything is too simple,trivial and can be done easily.

But the market does not operate like this. The world of investment is much more complicated and difficult than this kind of thinking; in the world of investment, many important things always take time, need in-depth exploration and time to study, which cannot be achieved overnight. It is very typical. Some of the breakthrough points often occur in subtle places that are difficult for ordinary people to detect.

Deny of circle of competence

The circle of competence that Buffett has repeatedly emphasized in Haaretz, March 23, 2011 is “The important thing is to know what you know and know what you don’t know.” — The key point is that the boundary is very important. Most things are incomprehensible. This is why Keynes said: “We simply don’t know.” However, people with high IQs generally fall into a myth, thinking that they know everything and never admit that their knowledge are limited.

Temperament is the most important

In his 2006 shareholder letter, Buffett wrote: “Temperament is also important. Independent thinking, emotional stability, and a keen understanding of both human and institutional behavior is vital to long-term investment success. I’ve seen a lot of very smart people who have lacked these virtues.”

No so-called smart or high IQ in investment

Finally, I want to remind everyone that there are not so many people in this world who are smart or high IQ that you and I think. Most people are self-righteous smart or high IQ; especially when it comes to investing, there is no so-called smart or high IQ people can have the advantage, but it is possible to succeed by holding correct and simple investment concepts, working hard, doing long-term, continuous basic research, and accumulating experience-most of the problems in this world People think that they are smarter than others, and only a very small number of people are willing to do these dumb and boring things for a long time. This is also the reason why successful investors are rare.

Don’t think you’re a genius because of tricks

David Rubenstein, co-founder and executive chairman, The Carlyle Group (ticker: CG) said “The most important thing is to read, know what you’re getting into, and don’t think you’re a genius because you’re good at making widgets. Just be realistic in your rate of return expectations.”

Conclusion

Munger said it well in Berkshire’s 2023 shareholder meeting: “Still, Munger said value investors should be comfortable making less because there’s more competition. He said there’s a lot of more in the hands of “smart people all trying to outsmart one another.”

But Buffett said those people are trying to outsmart each other in arenas investors do not have to enter. He said the world is overwhelmingly short-term focused.

Disclaimer

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