Too high IQ is not useful in investment, but will hinder

Too high IQ is not useful in investment, but will hinder


Then, I’m pretty sure. “Most people don’t want to admit that they’re not very smart, they just think they’re smart.” In addition, please refer to my other blog post “Why people with high IQ prone invest failed“, you will understand better that high IQ is not necessary in investing.


Newton’s heartfelt words

Isn’t Newton a smart enough man! In the famous stock book “Extraordinary Popular Delusions and the Madness of Crowds”. Newton’s own words from the bottom of his heart are recorded, “I can calculate the motion of heavenly bodies, but not the madness of people.”  During the “South China Sea” bubble more than 300 years ago, Newton also entered the market and bought the shares.

After the stock rose, he sold the stock and made money. However, the shares went up all the way. He couldn’t resist the temptation. He regretted selling it too early, so he entered the market and bought again. In the end, he was almost wiped out what he earned during the bubble three centuries ago, and lost all the money he had earned from the stock market.

Keynes became a master

When Keynes was young, relying on his intelligence, understanding of the economy, finance, and the world situation, familiar contacts, and the government’s financial policies, he had a youthful, unruly, typical young man and high IQ. Typically an arrogant characteristics of people. When he was young, he used top-down oriented, standard subjective stock selection, thinking that he was already familiar with all the operating rules of the world, and was able to grasp all the pulses of the world, and all the determinants of the stock market were inhis own understanding.

The result is that he can only make a small amount of money and miss opportunities over and over again. As he get older, he changed completely different understanding of life and investment, and gradually change to long-term investment, concentrated investment, and pay attention to the intrinsic value of a company. His achivements in investment is almost equal achievements in academics.

Even Buffett has repeatedly admitted that his investment philosophy was greatly influenced by Keynes. Buffett also suggested that investors must read Chapter 12 The State of Long-Term Expectation in the book “General Theory of Employment, Interest and Currency” by John Maynard Keynes. He believes that this chapter is as important and powerful as Chapter 8 The Investor and Market Fluctuations and Chapter 20 Margin of Safety in the book “The Intelligent Investor” by Benjamin Graham.

What did Buffett say

In the world of investment, too high an IQ is useless. The success of investment depends on personality, not IQ. A good personality always trumps a high IQ. Like Buffett said “Success in investing doesn’t correlate with I. Q. once you’re above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.” “Success in investing doesn’t correlate with IQ … what you need is the temperament to control the urges that get other people into trouble in investing.” “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ"

The experience of Peter Lynch

Peter Lynch once said that when it comes to investing, “Philosophy and logic are more important than math or finance in picking stocks.”

In his book, Peter Lynch repeatedly warned investors that they must invest within their own circle of ability to succeed. He cited countless examples to show that a bunch of medical doctors are not investing in the medical and health care industries that they are familiar with. Instead to invest in a small oil company that deliberately wants to get rich overnight and invests in oil drilling and exploration like a gambling, hoping that the companies it invests in will announce the emergence of oil from the ground tomorrow, which will increase the stock price several times a day.

Keynes put it more aptly “just like a doctor shouldn’t operate on himself.”

Strange behavior patterns of people

This is what I pointed out in the first chapter , section 1-1 of my book “The Rules of Super Growth Stocks Investing”, “Humans are born with a complicated and difficult to understand behavior pattern. People tend to complicate easy things, and most people adopt these simple and proven successful investment principles that have been made public or have already been actually verified; instead, they are doing everything they can to find complex, unproven, and failure methods that countless people have experienced, and they are desperate to invest. Even if I fail, I don’t regret it.”

Human temperament determines success

The traits required by investors: time, perseverance, insight, discipline, patience, knowing one’s own circle of abilities, and the courage to be different are much more important than high IQ or showing off cleverness; but most people I don’t believe this, and don’t think it is important.

Not so many smart people in this world

But there are actually not so many so-called high IQ or smart people in this world, especially in the stock market. Most smart people just think they are. The world of investment is complicated then people think, and you will know it at the first try. This is why George Goldman (pseudonym Adam Smith) said, “If you don’t know who you are, the stock market is an expensive place to find out.”

If IQ decides to invest in achievements, aren’t all the people who are listed as “Mensa members” in the world are monopoly? In fact, this is not the case!


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