To be an Intelligent Investor, intelligence has nothing to do with your IQ scores or how much smarter you are among your peers. In investing, intelligence is about having emotional intelligence – you must be able to harness your emotions and think for yourself.
Ben Graham explains this kind of intelligence, “is a trait more of the character than of the brain.”
When Genius Failed To Be An Intelligent Investor
Here’s a proof that high IQ and higher education are not enough to become an intelligent investor.
In 1998, Long Term Capital Management L.P., a hedge fund run by a battalion of mathematicians, computer scientists and two Nobel Prize-winning economists, lost more than $2 billion in a matter of weeks on a huge bet that the bond market would return to “normal.”
But the bond market kept right on becoming more and more abnormal and Long Term Capital Management had borrowed so much money that its collapse nearly capsized the global financial system.
Back in the spring of 1720, Sir Issac Newton owned shares in the South Sea Company, the hottest stock in England. Sensing that the market was getting out of hand, the great physicist muttered that he “could calculate the motions of the heavenly bodies, but not the madness of the people.”
Sir Issac Newton dumped his South Sea shares, pocketing a 100% profit totaling 7000 Pounds. But just months later, swept up in the wild enthusiasm of the market, Newton jumped back in at much higher price and lost 20,000 Pounds.
…By letting the roar of the crowd override his own judgment, the world’s greatest scientist acted like a fool.
In short, if you’ve failed at investing so far, it’s not because you’re stupid. It’s because, like Sir Issac Newton, you haven’t developed the emotional discipline that successful investing requires.
An Intelligent Investor Simply Means…
- Being Patient
- Disciplined and
- Eager to Learn
If you acquire these three qualities and practice it then you will get results on your investments like an Intelligent Investor gets. So, are you an Intelligent Investor?
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