Ignore IQ


IQ does not matter when it comes to success in the financial markets.
The average professional in the investment industry does not underperform because he lacks IQ. On the contrary, the investment industry collects a lot of the brightest people in the world in terms of sheer IQ. Banks, hedge funds and trading desks are filled with Ivy League graduates and PhD’s.
But it’s clear that IQ doesn’t = success in investing/trading. If IQ mattered, the average genius-filled hedge fund wouldn’t underperform buy and hold.
Successful investing is about being opened minded, backtesting, and employing simple logic. It isn’t about seeing who’s the brightest one in the room.
The best example to illustrate my point is Long Term Capital Management. Long Term Capital Management was filled with literal geniuses: one of them won the Nobel Prize for his works on options pricing models.
Long Term Capital Management had a terrific 4 years from 1994 – 1998, and then blew up in spectacular fashion in 1998. Nobody had more IQ than these guys. IQ doesn’t matter. No one is “too dumb” to succeed at investing/trading.

Leave a Comment