Legendary investor Warren Buffett famously proclaimed: “The good news I can tell you is that to be a great investor you don’t have to have a terrific IQ. If you’ve got 160 IQ, sell 30 points to somebody else because you won’t need it in investing. What you do need is the right temperament.”
Yes, we can take this comparison as a poetic metaphor. But if we take it seriously we must admit Mr. Buffett is terribly wrong.
It goes against everything we know about psychometrics. IQ is related to talent and creativity. You won’t find many people with an IQ of 80 to be good authors and possess huge creativity.
Mr. Buffett provides us with other crucial determinants of whether you would make a good investor or not (and rightfully so). But he forgets talents are dependent on IQ. You have plenty of top physicists with IQs of 160 or 180 that would make miserable investors, however, the top investors (even those that are not famous) have stratospheric IQs.
Warren Buffett had never conducted any study. But psychologists had (in terms of high intelligence and talents). If you have an IQ of 180 (one in 20 696 863) your chance to have a super-duper talent for investing drastically increases.
We also know that super-clever people with extremely high IQs don’t have to have a special talent for banking, investing, real estate and so on but their intelligence is correlated at least with the average talent normal people possess in those occupations.
A lot of folks claim Buffett and his fellow investor George Soros purposefully mislead the other investors with answers that do wrongdoings to them. Is Buffett or Soros buying or selling? We never know.
So attracting less intelligent investors to the game may be his other shot. We also know Buffett and Soros are not the best investors, the best are hiding in their anonymity investing for the super-rich interest groups. And their IQ? 160-180 points I guess…
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