Are You Too Smart to Be Rich?

The headline may sound ludicrous, but I'm serious.

We've learned all our lives that smart equals rich. Think back to the person in your high school designated "Most Likely to Succeed." If the word "valedictorian" didn't come to mind, I'd be surprised.

But there is a mountain of evidence suggesting that being extra smart won't make you extra rich.

How the big boys fared ...
Repeatedly, at the highest levels of finance, we've seen that smarts don't necessarily equal riches.

The collapse of all-star hedge fund Long-Term Capital Management gave us one object lesson. Despite boasting two winners of the Nobel Prize in Economics, the fund blew up in the late 1990's -- requiring a massive bailout by just about every Wall Street heavy hitter, including Goldman Sachs (NYSE: GS  ) and JPMorgan (NYSE: JPM  ) .

We saw another object lesson just a few years later in the collapse of Enron -- the supposed "smartest guys in the room."

And more recently still, we saw one unfold as the, as my Foolish colleague Bill Mann would say, Harvard-stupid moves of Wall Street threatened our entire financial system.

It ain't just the big boys ...
But just because you and I aren't running hedge funds doesn't mean the same principle doesn't apply to us.

Economist Jay Zagorsky ran a study to determine whether brains translate into riches. His conclusion? "Intelligence is not a factor for explaining wealth. Those with low intelligence should not believe they are handicapped, and those with high intelligence should not believe they have an advantage."

In his book Outliers, Malcolm Gladwell explored example after example of how the successful became so. He concluded that "once someone has reached an IQ of somewhere around 120, having additional IQ points doesn't seem to translate into any measurable real-world advantage."

Berkshire Hathaway (NYSE: BRK-A  ) (NYSE: BRK-B  ) billionaire Warren Buffett seems to agree: "If you are in the investment business and have an IQ of 150, sell 30 points to someone else."

Is stupid the new smart?
You may notice a disconnect here. Those people I quoted above are both extremely smart and pretty rich -- including the most successful investor of our time. Yet they all seem to be saying that super-high IQs don't help you become rich.

Where's the gap? One word: arrogance.

It wasn't excess brains alone that sunk Long Term Capital Management, Enron, and the rest of the Wall Streeters. It was excess arrogance about those excess brains -- believing that because they were smart, they could do no wrong and anyone who questioned them just didn't get it.

How to avoid disaster
For you and me, there's a clear lesson from all this: invest humbly.

Specifically, it's a reminder to know what you know and don't know -- which means abiding by Buffett's concept of the circle of competence. In other words, you should only make individual stock picks in areas where you have a competitive advantage.

A few examples:

  • In the technology space, can you predict which incumbents (e.g. Google (Nasdaq: GOOG  ) and Microsoft (Nasdaq: MSFT  ) ) can innovate and fortify their moats? Can you pick the one or two long-term winners from the hundreds of new start-ups buzzed about on TechCrunch?
  • In banking, can you wade through the incomprehensible-to-most-pros financial statements of a Citigroup or a Goldman Sachs to properly assess risk?
  • In energy, do you have a good grasp of the political and supply constraints on Big Oil providers like ExxonMobil (NYSE: XOM  ) , the definitions of terms like crack spread and grid parity, and some feel for the ultimate feasibility of the technology behind alternative plays like First Solar.

Once you identify your circle of competence, remember that the folks at Long Term Capital Management, Enron, and Wall Street thought they had things figured out, too. Stay humble, my friends.

My colleagues at Motley Fool Inside Value newsletter strive to follow Buffett's circle of competence advice -- and part of their circle of competence includes finding companies that are undervalued. If you'd like to see -- completely free of charge -- 2 stocks they like right now, click here for a free report.

Anand Chokkavelu owns shares of Berkshire Hathaway, Citigroup, and Microsoft. First Solar and Google are Motley Fool Rule Breakers picks. Berkshire Hathaway is a Stock Advisor selection. Berkshire Hathaway and Microsoft are Inside Valuerecommendations. The Fool owns shares of Berkshire Hathaway. The Fool has a disclosure policy.


Read/Post Comments (47) | Recommend This Article (83)

Comments from our Foolish Readers

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  • Report this Comment On September 28, 2009, at 4:50 PM, stevemason5 wrote:

    Nicely done.

    However, more than arrogance is a factor for most folks.

    See Charlie Munger's "Poor Charlie's Almanack" and Peter Bevelin's "Seeking Wisdom: From Darwin To Munger". The former has killer concepts on behavioral finance. The latter has lists to use to correct or at least reduce their effects. The @#$%#$ hardest part is developing steely discipline combined with flexibility.

    Its harder than it looks. If it was easy, we would all be rich.

  • Report this Comment On September 28, 2009, at 4:59 PM, lemoneater wrote:

    Yes, I'm resigned to a life of poverty, but that is okay because I'd rather be smart than rich. :)

  • Report this Comment On September 28, 2009, at 5:36 PM, stonebusted wrote:

    lemoneater that may be the dumbest statement I have ever heard. I like it, but its dumb.

    Give me the $$$$. Let the smart ones count it for me. If they steal cut of their fingers.

    Problem is I'm poor and dumb. Now that sucks.

  • Report this Comment On September 28, 2009, at 5:39 PM, Doccus wrote:

    This article hits HOME for me...

    More times than i can count, friends have commented on "how smart' I was..(whether it was true is another matter entirely:)..

    My response has always been 'if I were really smart i'd be rich...'

    and , yes , arrogance DOES play a factor..

    I had a chance to invest in bottled water right at the beginning.. but I live in B.C. Canada.. where water is endless.. and i thought 'what kind of fool is going to invest in watrer in B.C.!'

    ....i guess a motley fool!

  • Report this Comment On September 28, 2009, at 7:44 PM, 100percentpick wrote:

    This article doesn't make sense.

    If you're smart enough, you'd be rich(you won't be poor). Otherwise, you aren't smart.

  • Report this Comment On September 28, 2009, at 8:37 PM, thisislabor wrote:

    I think the deal with IQ is your trained through grade school to study stuff with that IQ. So you end up thinking that because your smart your work is easy.

    and the not so smart people get use to working a little harder to make the grade so to speak.

    as you get older you find out just because your smart doesn't mean you wont have to work. Once, for your money and then again to find a good investment for your money.

    if your a little bit slower you end up having to work harder to make the grade so to speak. so the slower person ends up learning discipline and the value of hard work at a little bit earlier of an age. your smarter person ends up having to learn these things later in life when he should be using his IQ instead.

    something I have been learning lately, that just because I'm smart doesn't mean life is easy.

  • Report this Comment On September 28, 2009, at 10:35 PM, PsycheDaddy wrote:

    I think intelligence may or may not help. It's called taking a chance in life. Some say don't change your life if it's going good. But change is what makes people thrive or prosper. If you see something that you believe will make you better in life, go for it.

    I was in real estate for 20 years. Then decided to build a truck stop because I wanted a change and thought the business would do good. While building it, everyone stopped by and ask me if I was sure I knew what I was doing. When complete, and the trucks started rolling in, everyony said "I told you it would work".

    I took the chance and others would not. It turned out well but what if it would of failed. I would be bust.

    Hinesight tells me it was a good ideal. Change is what is hard to do whether your smart or less intelligent.

  • Report this Comment On September 28, 2009, at 11:46 PM, kbs220 wrote:

    "It was excess arrogance about those excess brains -- believing that because they were smart, they could do no wrong and anyone who questioned them just didn't get it."

    Anand: I wouldn't say that your analysis is incorrect, but I'd say that it might be incomplete... In this sense... I've worked at some of the Street's "best" buy-side and sell-side firms, and I never found that the practice of excess arrogance was limited to those with excess brains. Excess arrogance is an art form among many on Wall Street who are among the stupidest people you'll ever meet. Put another way, I didn't find that excess arrogance on Wall Street had any direct correlation to an individual's IQ. And if there's any correlation at all between excess arrogance and brains, it might be a reverse correlation. The results, though, are typically the same.

    So, a more accurate, but less salesy, title for your article might have been... "Are You Too Arrogant to Be Rich?"

  • Report this Comment On September 29, 2009, at 1:27 AM, WiseChoice4u2 wrote:

    Wisdom and brains don't always run side-by-side. Common sense and wisdom are closer.

  • Report this Comment On September 29, 2009, at 10:07 AM, Doccus wrote:

    I think psychedaddy might be right, inasmuch as it's the willingness to take a risk that offers opportunity..

    It's not enough though, it's followup that makes things happen, and, alas, just plain hard work.

    Intelligence really doesn't enter into the picture at all...except in , perhaps, the ability to learn (which really IS handicapped by excess arrogance!).

  • Report this Comment On September 29, 2009, at 10:41 AM, TMFEditorsDesk wrote:

    Thanks for all the comments...a couple things loosely in response:

    Charlie Munger does a better job making the argument in less than 50 words than I do in hundreds of words:

    If you think you have an IQ of 160 but it’s 150, you’re a disaster. It’s much better to have a 130 IQ and think it’s 120.

    Buffett talks about emotional intelligence being paramount...the Kipling concept of keeping your head while others lose theirs.

    -Anand (TMFBomb)

  • Report this Comment On September 29, 2009, at 11:38 AM, jrj90620 wrote:

    Probably being too smart makes you overthink a potential investment and never take the risk.

  • Report this Comment On September 29, 2009, at 2:18 PM, NonnoDoug wrote:

    Look at all the spelling and grammatical mistakes in these comments. I was always taught that one's use of language (vocabulary, correct grammar and punctuation, spelling, all aspects thereof) reflect one's

    intelligence, attention to detail, upbringing, class and especially quality of educational instruction. (Even the Motley story has a glaring error: the correct word to use is "sank", not "sunk", in this context). I know you are all smarter than I (not than "me"), so it must be poor teaching that's to blame. Nonetheless, I consider myself wealthy in awareness and broad knowledge, inquisitiveness and love. That's rewarding!

  • Report this Comment On September 29, 2009, at 2:22 PM, baekeland108 wrote:

    HUMILITY seems to be the last of the virtues we learn as we go through life when it should be the first.

  • Report this Comment On September 29, 2009, at 5:14 PM, TMFEditorsDesk wrote:

    @ jrj90620 and PsycheDaddy:

    These seem to be complementary comments...being confident enough to pull the trigger after you've done your research. Of course, pulling the trigger when you think you've done your research thoroughly (but haven't) is also a problem.

    -Anand (TMFBomb)

  • Report this Comment On September 29, 2009, at 10:12 PM, wolfman225 wrote:

    NonnoDoug--

    Nonetheless, I consider myself wealthy in awareness and broad knowledge, inquisitiveness and love. That's rewarding!

    Speaking of arrogance.........try paying the rent/mortgage/gas bill, etc. with "awareness" and the car payment with "inquisitiveness" and get back to me on that.

    It's been my experience that most (not all) of the spelling/grammatical errors are not the result of ignorance/stupidity; rather, they result of an overactive mind out-pacing the typing. After all, not everyone can type 90+ wpm. :)

  • Report this Comment On September 30, 2009, at 2:19 AM, lordmorgul wrote:

    wolfman225,

    Poorly written posts on web forums are often the result of 'haste' as you suggest, but I think it is also a simple lack of sincere interest in communicating clearly. People tend to be much more interested in having their say in a conversation than in listening, and similarly they do not take the time to communicate clearly because they really have no interest in making sure others can UNDERSTAND -- instead they prefer only to have dominated the conversation.

  • Report this Comment On September 30, 2009, at 11:29 AM, theHedgehog wrote:

    It may be that we thought the smart guys would succeed when we were in high-school, but later on, we learned that the A students generally wound up working for the B students. Something to think about.

  • Report this Comment On September 30, 2009, at 12:12 PM, TMFEditorsDesk wrote:

    @theHedgehog,

    Management guru Tom Peters said something really interesting when he visited the Fool a while back. When asked how he'd hire employees, he said he'd look for folks with something off on their resumes. He didn't want the 4.0-throughout-school person b/c that person has always had success with the status quo and thus thinks inside the box.

    -Anand (TMFBomb)

  • Report this Comment On September 30, 2009, at 12:29 PM, PdoBear wrote:

    I'm sure all the sub-105's out their would love to believe this garbage but it's demonstrably false. High IQ does translate into wealth.

    Yes, Long Term Capital Management was a disaster led by two Nobel prize winners. Yes. Goldman Sachs and Lehman led themselves to disaster with CDS and MBS.

    But the subs always forget something. Those two Nobel prize winners at LTCM, the derivative salesmen and management at GS and Lehman -- They're in the top 2% of asset holders now. Sure, they burned the sub-105s but not themselves. The people with high IQs got rich!

    Even better, they used their superior intelligence to force the working class sub-105s to bail them out and even buy mortgage backed securities to prevent the "imminent collapse of the system". Will the subs never learn? Answer: No.

  • Report this Comment On September 30, 2009, at 3:29 PM, CityWealth wrote:

    Post #1

    It's not being smart or not that does or does not make you rich, what everyone is missing is that

    Money represents debts and obligations between people, there is only a fixed amount (Relatively speaking), therefore... Getting rich is about taking advantage of large numbers and DUMPING YOUR RISK ON OTHERS, and not much else. It's a game of musical chairs folks, everytime people or businesses raise their raise prices they are TRANSFERRING THEIR DEBT RISK TO YOU.

    Getting rich is all about large numbers -- Credit default swaps and packaging mortages of millions of people and selling them to investors was doing just that, X amount of dollars from MILLIONS of people = big number of monetary units.

    Stock market - X person buys Y stock in company Z, Z has LARGE NUMBER of PAYING customers and has good margins - large numbers again. Fool A buys security at low price of 3, fool B buys it at ah igher price using computers as an abtraction to hide the fact peopl are trying to TRANSFER RISK between fool A and fool B, fool A reduced hi risk by transferring it to FOOL B, and whoever is the last man out gets stuck with all the risk.

    The stock market is mainly rich mans game, look at the stock market this past 6 months with hundreds of percent rallies because everyone got out of the market in the crisis, even if a stock increases by 5%, 5% of a very large number is more money then most average income people will make in their lives.

  • Report this Comment On September 30, 2009, at 3:36 PM, CityWealth wrote:

    Post #2

    Getting rich is about exploiting large numbers (increasing your number, never decreasing it), and not spending money. It's not really about school, blind hardwork or anything else, since you don't have a lot of control about choices other people make about how they spend their money. It's about recognizing that if you don't have enough money to cover all your expenses for the rest of your life, YOU ARE IN DEBT even when you have been taught to think you aren't!

    I have always kept an invisible debt in my head from when I was in my twenty's I added all my expenses until I was 80-90 years old and THATS really where most people start around negative -500,000 to -1,000,0000 bucks, thats what all people should have in their little heads when they think about how to manage money *if I have to work for others and can't afford all my certain future payments for the rest of my life... I AM IN DEBT and will have to WORK!"

    That is what most people don't realize, say you only have 100,000 in savings and spend most of your money on car insurance, health insurance, gas, electricity, etc. Your job is to CUT CUT CUT because you are still in debt until you work off most of YOUR TRUE DEBT (you have enough money for all your *certain future* expenses)

    People don't get rich just because they are smart or dumb, they get rich just by doing things CONTRARY to the opinions and judgments of others and recognizing opportunities. Then there are those forces outside of people's control.

    No one controls who will come to your business, my parents are in the service industry, they own their own business they aren't the most bright people. But they knew how to save money and absorbed the costs of not hiring people to do work for them by doing it themselves, so they worked long hours - thereby reducing money lost -- key principle.

    But they had a couple of down years where they lost tonnes of money because business was bad (can't control how people spend). Towards their older years they made more money then in the first 10 years of business combined, you can't simply force people to decide to spend money with your business my parents certainly didn't get rich by "being smart" they got rich simply because business was good those years (large numbers again see?), they didn't do anything differently then they had in the last 30-40 years.

    Once you have enough money,money makes money, and the only way to make the most money is not to spend it on things that that add weights around your neck.

    The easiest way to get rich is:

    1) Don't have any liabilities and I don't mean what you were taught are liabilities, you have to realize that ALL money going out is potential liability.. See the bank bailout and investors who lost big over the last 2 years for "potential returns" that never materialized.

    2) Do everything contrary to what normal people do (buying cars, houses, toys, etc)

    3) Live simply.

    4) Do not become addicted to material things since it's peoples material vices that keep them working on the treadmill until they're 70, find joy in things that require little to no money at all

    5) Start working as soon as possible and saving money and investing it.

    6) Live with your parents for as long as you can when you are young and save as much money as humanly possible before they are dead, you'll be laughing at everyone else when they are loaded with debt and still working when they would rather be retiring.

    7) Don't listen to societies or other peoples judgements, those people will be fretting about money and debt, you may live with your parents till you are 3 0 or more but you've:

    a) Avoided becoming indebted like most people by knowing that ANY MONEY SPENT is increasing your DEBT and YOUR RISK

    b) Have more time to do what you want because you knew as long as you didn't have money to cover most or all of your future expenses YOU WERE IN DEBT

    c) Laugh that most people on earth NEVER realize this truth until it is too late.

    There are many paths to getting wealthy most people are too caught up in bad habits, cultural pride and adolescent perceptions to change.

    The real secret of getting rich is to live simply invest wisely and spend the least money on things that don not add value towards reducing your debt, and always never try to take on expenses (risks). To truly understand whether or not any purchase you make or bill you pay, whether it is a weight around your neck (too high priced houses, cars, rent, needless toys) or not.

    You don't have to get a good education or even a great job to live well, you just have to do whatever it takes to avoid spending and therefore losing money when you have hardly any, and you must remember the golden rule:

    When you don't make a lot of money, whenever you pay for something you are losing money. Therefore try to pay the least or not at all, always buy 2nd hand or look for freebies. Now everyone couldn't do this or the economy would shut down but that is the game in capitalism, capitalism is about transferring risk and debts to those who don't have enough or who haven't worked enough to cover future expenses. Those with the most money are (the ones who aren't stupid) immune from risks to their livelyhood so they can absorb losses because they have way more then they need.

    Most people don't have that kind of willpower.

  • Report this Comment On September 30, 2009, at 3:46 PM, CityWealth wrote:

    It's too bad you can't edit comments at fool, it was big post to manage my apologies folks.

  • Report this Comment On September 30, 2009, at 4:11 PM, Intlinvstr4life wrote:

    A bit of a "soft-ball" article, but very pertinent given that the big 'A' could be considered protagonist to our main-street/wall-street dithyramb.

    "Genius is one percent inspiration, ninety-nine percent perspiration."

    – Thomas Alva Edison, Harper's Monthly (September 1932)

    Recommend reading the dividend article by Ilan Moscovitz

    posted today.

  • Report this Comment On September 30, 2009, at 4:40 PM, catoismymotor wrote:

    I found this article to be an encouraging message to those who might be on the fence when it comes to investing. I put it to you that DD and patience are the two most important instruments in investing. Both can be learned by most any individual. If someone wishes to begin investing many obstacals can be overcome with by asking questions, careful listening and good note taking.

    I know a few people from when my wife was in grad school which now hold Ph.D's. These same people are the valedictorians, rhodes scholars, full academic scholarship winners. I am thankful that none of these people carry themselves as cocky schmucks. I love them all. One thing I found perplexing is the fact that not one of them wants to put a dime into individual stocks. Most have money going into their employer retirement accounts and maybe a couple of others have mutual funds. When I asked a few of them why they are reluctant to enter the market a constant in all the conversations is *time*. Between work and family oblgations they are stapped for time. What free time they have is used for trying to catch up with spouses and the children. My wife is in somthing of a similar sitaution. She would be a ferocious investor if she was interested and was able to take the time to apply that lovely brain to the task. I am fortunate enough to have a somewhat flexable schedule so DD and general homework is something I can indulge in from time to time.

  • Report this Comment On September 30, 2009, at 5:08 PM, wenger2k wrote:

    IQ only represents one aspect of a person's capabilities. I believe there are 3 innate human values that collectively determine success:

    1. Motivation

    2. Mentoring/Education/Skill

    3. Intuition/Insight

    A better question might be why aren't relatively smart people successful more frequently?

    I believe that the issue is that most people are never educated in how to turn capital into income - and I'm not saying i've got it mastered either btw. One major aspect of that is that it is very difficult to understand and evaluate risk/reward. People & companies develop spreadsheets and models to evaluate risk and reward but we all know that those particular spreadsheets and models are based on numerous assumptions and projections which are themselves based as much on crystal balls as reality. And the reality is people that are good at risk analysis are very infrequently good at being risk takers. It is the risk takers that either don't know or actively ignore these risks that are ultimately truly successful. Of course that ignores the ones that also ignored the risks and got steamrolled who we know outnumber the so called successful ones by a large margin.

    In most fields there is a belief that executive decisions are mostly made objectively. My experience is that the reality is the exact opposite - ALL (or nearly all) executive decisions are made subjectively and then available facts are selected or built as needed to objectively defend their decisions. This shouldn't be surprising after all - executives are humans too - well some of them at least. Ultimately success then is how good people are at making subjective decisions - which is really based on intuition & insight. The most successful folks have the best intuition - its some magical capability to look at numerous pieces of information many of which are likely to be contradictory and select the ones that magically point the way. Here's to wishing my Intuition IQ was higher.

  • Report this Comment On September 30, 2009, at 6:31 PM, Doccus wrote:

    Some points... and then I'll say no more...

    The foremost prerequisite is not intelligence, but a true understanding of the value of money...

    It's true the Hi-IQ set can often slip through school easily, without learning proper work habits...

    although educators don't implicitly encourage sloppy habits, it's still taught by default , inasmuch as it's always been possible to slide through secondary school without actually doing any work at all... far too much emphasis has always been placed on exams for final grades...

    Furthermore, hard work, in and of itself, is not even close to enough, either..

    Let's take a physician as an example.. They have no life... except for work...

    Surprisingly few manage to save up enough for early retirement... except those that carefully examine their options and invest wisely... and you don't need to be a professional to do that...

    Or 'smart'... but what you DO need is to fully research your options (the hard work component)..

    look for and seize opportunities when they arise (the humility component.. i.e. the willingness to learn..)..

    And follow-through... otherwise nothing will come of it...

    That is 'Smart'...

  • Report this Comment On September 30, 2009, at 6:40 PM, Doccus wrote:

    OK.. I'll say ONE more thing.. it appears you shouldn't make any calls about one's grammar on this comment board, because it decimates all the formatting.. (!)

    That certainly wasn't how I formatted it :)

  • Report this Comment On September 30, 2009, at 9:34 PM, TMFEditorsDesk wrote:

    @CityWealth,

    Well thought out post...I love the concept of mentally pulling future debt forward.

    @catoismymotor,

    I tend to think 95% of people should be mainly in index vehicles for just that reason...a successful individual stock picker really does have to put time in to learn the craft of investing (and even then could fail to beat the market). Hopefully your friends are taking the time to allocate their capital well.

    @wenger2k,

    Agreeing that those three are large factors. Motivation is huge...I firmly believe that the successful are largely just those who want it more and are willing to sacrifice to get it...whatever "it" is.

    @Doccus,

    It's the old cliche...work smarter, not harder...but it's really both...work hard and work smart.

    -Anand (TMFBomb)

  • Report this Comment On October 01, 2009, at 1:07 AM, thisislabor wrote:

    so, IQ, will power (im classifying this under both follow through and hard work because both emotionally suck), education, willingness to take risks - and therein luck, and one I do want to add to the table, is other wealthy or wise people around you to reflect ideas off of.

    that last one helps me keep my act together in both money and life.

  • Report this Comment On October 01, 2009, at 6:48 PM, TMFEditorsDesk wrote:

    @truthisntstupid,

    I hear rocket science is up and coming.

    -Anand (TMFBomb), who actually knows three rocket scientists but no brain surgeons.

  • Report this Comment On October 02, 2009, at 10:57 AM, rw007 wrote:

    Written by a person whose IQ is less than 120.

  • Report this Comment On October 02, 2009, at 11:17 AM, TWOTIMETUNA wrote:

    hard work and luck is how I did it

  • Report this Comment On October 02, 2009, at 12:27 PM, TMFEditorsDesk wrote:

    @rw007,

    Haha, I was waiting for someone to make that crack. I would have gone with: "Anand, is it possible you're too dumb to be poor?"

    -A

  • Report this Comment On October 02, 2009, at 3:00 PM, treasurefish wrote:

    "It is better to be a witty fool, than a foolish wit!"

    Quote from Shakespeare's play "Twelth Night."

  • Report this Comment On October 02, 2009, at 3:24 PM, mikecart1 wrote:

    Although I got an undergrad engineering degree at a top 25 university and getting my MBA at a top 25 worldwide university, I'm not that smart.

    Therefore I will be rich teehhe!

  • Report this Comment On October 02, 2009, at 4:11 PM, Merl737 wrote:

    Being super smart without being ethical or prudent is ultimately of no use; I think that is the point of this article. Every money genius that got really crazy and lost control in the days of deregulation was eventually brought down. Many of these reckless financial wizards crashed along with their companies; taking thousands who lost their jobs and their portfolios to hell with them. So, being smart is off limited value; if one is not also wise.

  • Report this Comment On October 02, 2009, at 4:19 PM, Merl737 wrote:

    I also think it helps to have good judgement and an additional sense to get rich. There are many very bright people who are poor; because they do not have what it takes to be rich. These types are logical and have good qualities that are of no use in understanding or sensing the market. So much has to do with emotion, passion, intuitive sense; and gut feelings that are all suppressed by logical thinking and the drive for precision. Just as there are many super attractive people who do not have what it takes to be models or actors; so are there many super bright people who cannot corner the market.

  • Report this Comment On October 02, 2009, at 4:32 PM, venturen wrote:

    Reponse to lordmorgul

    This is a bulletin board to exchange ideas. People like you with your I got an A in English and I don't care what the ideas are...it was dumb because you misspelled a word. Get a life...these are quick exchanges and why would anyone bother to send a post to their editor for revision. Is the problem you aren't very good with ideas...but you are a top-notch speller.

    On September 30, 2009, at 2:19 AM, lordmorgul wrote:

    wolfman225,

    Poorly written posts on web forums are often the result of 'haste' as you suggest, but I think it is also a simple lack of sincere interest in communicating clearly. People tend to be much more interested in having their say in a conversation than in listening, and similarly they do not take the time to communicate clearly because they really have no interest in making sure others can UNDERSTAND -- instead they prefer only to have dominated the conversation.

  • Report this Comment On October 02, 2009, at 4:40 PM, venturen wrote:

    I would like to posit that getting rich through trading definitely is not a smart persons game. Usually there is some inside track...kind of like Goldman trading before they make public their analyst calls. Though many smart people create great companies. Disciplined investing for the long haul is completely different and again doesn't have much to do with smarts. It is methodical disciplined approach. I have seen a brilliant doctor who can't drive from point A to B because he gets lost each time, but if I had cancer he would be the guy for me. A more appropriate word would be what is your TALENT!

  • Report this Comment On October 03, 2009, at 3:36 AM, amerbroker wrote:

    To John. Looke at this www.amerbroker.com

  • Report this Comment On October 03, 2009, at 1:56 PM, ilovesumm wrote:

    The IQ test is a broad test . So it means this person is book or test smart. I does not mean they are financially smart.

    There are many "smart" doctors , lawyers etc that end up working until they are very old because they cannot manage money.

    Just because you are smart at one thing don't assume you are smart in all things.

    Buffet lives on $100 00. 00 , even though he could draw far more in salary . He knows that spending too much is the best way to be poor. His house is valued at 750 k even though he's the richest man on the planet.

    Willie Nelson , Michael Jackson (rip) , Mike Tyson, Evander Hollyfield the list is endless ,, they made money but they SPENT more. They had millions of dollars and should have been set for life but spent too much and were financially reckless. Their spending was endless but their income wasn't.

    The millionaire next door states most millionaires make around 70k per year. They just know how to save and manage money.

  • Report this Comment On October 03, 2009, at 1:59 PM, ilovesumm wrote:

    Unfortunately people want to pretend they are rich by buying things they should not .

    Whenever I buy something I ask myself do I need it?

    OR do I want it?

    How often am I gonna use it ?

    Can i live without it?

    People should save 15% of their income.

  • Report this Comment On August 17, 2010, at 9:33 AM, artiecab wrote:

    Picking the right stock is a form of gambling. Everyone knows the street is rigged. Goldman, et al state: "Buy X stock," after they have bought millions of shares and told their friends. Then, they slowly but methodically start selling it. Add to the mix that if you flip a coin, 50% of the time it will come up heads and the other 50%, tails. Trading is a fools game. Buying and holding a company with good earnings and growth and paying increasing dividends is the only way to go. The biggest fools are the ones who trade penny stocks.

  • Report this Comment On November 13, 2010, at 8:11 AM, Jjoshue1 wrote:

    I prefer more EQ than IQ.

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  • Report this Comment On November 28, 2010, at 7:53 PM, Alijac wrote:

    Whether you're rich or whether you're poor, it's nice to be rich.....and whether you're married or whether you're single....it's nice anyway.

    If you either think that you're very smart, or you know that you are thought to be, by others, then you may be too smart for your own good.

    We buy things we don't need, with money we don't have, to impress those we don't even like.

    Money, like love, makes the world [whirled] go round...but then so does a big swallow of tobacco juice. Don't bite off more than you can chew, but if you have done, then chew like buggery...and don't spit it! Sink your teeth into it...as if it [you] were a 'sin'king funned.

    The following is what I saw on an investment page a while back. The reason for the initial commenter's problem [in quotation marks] may be self-evident by the 'spelling'. I suggest he give it a 'rest'. Given that his/her very brief comment was the only one featured, and that it was evidently posted for humour's sake, I could not resist adding an embellishment in my 'rising' to the occasion. He/she wrote:

    "I have a self-managed catastrafy."

    I wrote: I had one of those too but the weal fell off it!

  • Report this Comment On July 06, 2012, at 11:40 PM, Zombie111 wrote:

    As someone who has administered literally thousands of IQ tests, I would say that an IQ over 120 by definition is rare (top 10%), but that personality characteristics such as the ability to delay gratification is probably more important than IQ when it comes to financial nous. This plus perseverance has been mentioned by several of your writers in the past.

    Oh, if you have none of the above, I understand that getting into Congress is very helpful for picking the right stocks, for some reason.

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