Investing and IQ

Success in investing doesn't correlate with I.Q. once you're above the level of 125. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing.
-- Warren Buffett

Lots of people have used the above statement to illustrate that intelligence does not matter in investing. Well, they are wrong, if Buffet really meant IQ above 125.

If you refer to Wikipedia, an IQ of 125 is the 95th percentile of the population. A IQ above 125 will put you the top 5% of the population! Hence, if Buffett really meant IQ above 125, success in investing would correlate with intelligence. It is just that success in investing would not correlate with high intelligence.

Either Mr Buffett has gotten the IQ score wrong, or his definition of ordinary intelligence does not mean average intelligence. Well, to each his own.

P.S. Personally, I find it strange if intelligence does not matter in investing. To some extent, intelligence will matter in investing.


Long ago, Sir Isaac Newton gave us three laws of motion, which were the work of genius.

But Sir Isaac's talents didn't extend to investing: He lost a bundle in the South Sea Bubble, explaining later, 'I can calculate the movement of the stars, but not the madness of men.'

If he had not been traumatized by this loss, Sir Isaac might well have gone on to discover the Fourth Law of Motion: For investors as a whole, returns decrease as motion increases.

~Warren Buffett
ThinkNotLeft said…
Hi Createwealth8888,

Your anecdote is supporting this statement shown in my post -->

"It is just that success in investing would not correlate with high intelligence."

Well, Newton had high intelligence.

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