“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments.”
Charlie Munger
Do you know your intelligence quotient (IQ)?
If you are curious and you want to measure it, just go to the Mensa website and take the test. I did it, it is a challenging experience.
Did you take it?
Are you in the best 2% percentile? Or in the best 5%?
Now please listen: it doesn’t matter!
YOUR IQ IS NOT IMPORTANT TO ACHIEVE SUCCESSFUL RESULTS IN INVESTING. At least, it is not important to be at the top of the IQ ranking.
It is a common mistake to assume that high-IQ people take the best investment decisions. The point is that good investments depend on the right “temperament”, not on a high IQ – which in some cases may even become detrimental, due to behavioral biases.
According to Wikipedia, temperament broadly refers to consistent individual differences in behavior that are biologically based and are relatively independent of learning, system of values and attitudes. But this definition is not useful for the specific topic of investments.
I found the book of William Green “Richer Wiser Happier” a wonderful source of examples of successful temperament, as he describes the distinctive traits of some of the world’s greatest investors – all of them being learning machines and nontribal freethinkers.
Just to give you a short idea of some of these traits as described in the book:
- Mohnish Pabrai: cloning others’ best ideas
- Sir John Templeton: a self-disciplined, nontribal investor
- Nick Sleep and Qais Zakaria: focus on “destination analysis”, not on short term
- Tom Gayner: adopting “directionally correct” habits
- Charlie Munger: avoiding standard stupidities
As you can understand, these are all temperament competitive advantages, not IQ advantages.
Do you need to match 100% the temperament profiles of these investment masters?
No, you do not need to. But you should learn from them and selectively adopt specific habits or methods: you do not need to become like them, but you can improve yourself during your life and become the best version of yourself.
Are you going to follow my advice? Then, have a nice life journey!
Wise Value Investing 