Successful Investing is About Common Sense and Discipline, Not Super Intelligence, Pedigrees, or Complicated Systems

Intelligence and Successful Investing Don’t Always Correlate

Excerpts (emphases added):

In the preface of the Fourth Edition to Benjamin Graham’s The Intelligent Investor, Warren Buffet writes, “To invest successfully does not require a stratospheric IQ, unusual business insights, or inside information.”

Yet investors often search out the smartest, most educated investment professionals …

… even the most intelligent and sophisticated approaches to investing often don’t lead to successful outcomes.

Instead, it’s important that investors heed the rest of the Buffet quote we opened this article with, “What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding the framework”.  In other words: adopt an asset allocation based on your objectives, diversify broadly and target the recognized sources of expected return including smaller and more value oriented stocks, stay with your plan even when circumstances seem at odds with your approach, and don’t assume that above average intelligence or sophisticated models offer any reliable improvement in your odds of success.

**

Common sense and credibility that has been demonstrably earned should always be far more important than simply intelligence, educational credentials, social pedigree, status, position, connections, years of experience, assets under management, wealth, unrelated success, sexiness, emotionalism, celebrity, or other “impressiveness” measures.  Investors are better served by avoiding people who try to impress and by not being impressed by anyone.

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