Skip to main content
rss feedour twitterour facebook page linkdin
home

Financial Happenings Blog
Saturday, April 28 2007

An article reported on the 25th of April in the Courier Mail, and in a variety of other media outlets, that intelligence was not a relevant factor in investment success.

The report was based on a study published in the 'Intelligence' journal, by the author Jay Zagorsky from Ohio State University.

This should be good news for everybody, as it demonstrates that a huge intellectual capacity is NOT required for financial success.  Indeed, if the basic steps to financial success are spending less than you earn, investing regularly in a diversified portfolio of growth assets and so on - well then it does not take great intelligence to do that.

Indeed, there is evidence to show that a large IQ MAY BE A DISADVANTAGE for investment success.

MENSA, a group for people with the highest of IQ's have an investment club.  Larry E. Swedroe, in his book Rational Investing in Irrational Times wrote that:

"The June 2001 issue of Smart Money (a US Investment Magazine) reported that over the past fifteen years the Mensa investment club returned just 2.5%, underperforming the S&P 500 Index by almost 13% per annum." (RIIIT, pg 6-7)

It really shows that intelligence is not an attribute rewarded by the market.  If I had to guess intelligence would lead people to actively try and think of ways to outguess and beat the market.  They would have been better with a buy and hold index strategy.  So would pretty much everyone!


Posted by: Scott Francis AT 01:02 am   |  Permalink   |  Email
 
Request for Information 
If you have questions, or would like more information, please go to our Contact page and leave your name and contact information.