Is IQ necessarily correlated with investing returns or not?
The relationship between IQ and yearly returns in the stock market is a subject of ongoing debate among investors.
low IQ loses 100%: they don't know any better choices
middle range IQ earns 10%: buy and hold $SPDR S&P 500 ETF Trust(SPY)$
high IQ loses 700%: incredibly sophisticated and intricate strategy that turns out to be stupid
Some argue that individuals with IQs in the middle range tend to fare well, with the capacity to make reasonable returns through relatively straightforward strategies like buying and holding an index fund such as $SPDR S&P 500 ETF Trust(SPY)$.
Conversely, individuals with exceptionally high IQs may struggle in the stock market. These investors might overcomplicate their strategies, leading to losses that can be substantial.
Those with lower IQs are seen as being particularly vulnerable to substantial losses because they may lack the knowledge to make informed decisions, potentially losing their entire investment capital.
Do you agree with this meme?
Do you think IQ and returns have certain relationship?
Which type of investors are you?
What kind of investment strategy do you use?
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🌟🌟🌟It would seem that high IQ may lead to better investing or is it? Warren Buffett disagrees. In fact he said an investor needs to be smart, not a genius. He places more emphasis on Rationality and Emotional Stability. Rationality is a sound intellectual framework for making decisions and the ability to keep emotions in check are important qualities to have in investing.
I prefer to have EQ or Emotional Intelligence which is the ability to understand, use and manage my emotions in positive ways so that I do not make irrational decisions when Fear pervades the markets. That way I can achieve my goal of FIRE - Financial Independence Retire Early. My motto is Slow and Steady Wins the Race. It is certainly not Fast and Furious. Investing is after all a Marathon not a Sprint!
@Tiger_comments
While too low or too high and IQ might not be optimal, we need to have good EQ, AQ and FQ. Emotional intelligence, more specifically stability and maturity. Adversity Intelligence to learn from the investing mistakes. And Financial Intelligence to choose the appropriate instrument for your wealth. What do you think? [Great] @Bonta @daz88888888 @LMSunshine @GoodLife99 @melson @SirBahamut
Hence, the most important quality is take charge of emotions and have a long term time horizon in investing. What kind of investor are you?
相反地，智商異常高的個人可能會在股市中苦苦掙扎。這些投資者可能過於複雜他們的策略，導致了巨大的損失。
In most parts, ultimately it is the financial literacy of the individual and the environment in which allows someone to gain experience and knowledge regarding investments to gain favourable gains.
Imagine someone in the low IQ who comes from a poor financial background, that individual would be struggling to make ends meet, don't even mention investing. If investing, it would most likely be a form of gambling given the lack of financial literacy.
However, an individual with a low IQ that comes from a rich background may not know much but assuming that the family background is well versed in investing, that individual may still stand a chance to do well as the individual is being exposed to such elements and upbringing.
Hence, I personally feel its not too big of a topic to debate about and there are many other topics that will be more productive for discussion [Happy]
For sure IQ is needed to invest. But there are many factors beyond the control of the common man! And depends on investment horizon. In the short term, especially in the last 2 years, there are many 'fools'...[LOL]
Lower IQ are vulnerable to big losses and decisions many a time are gambles. Then again, one big win may cover all loses. If he or she is lucky, a 1000X gamble will propel him or her ahead of the higher IQ herd who are in a way limited by conventional wisdom.
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Therefore invest with discipline and rationality. One important rule, only invest and not gamble your money away.
Lower IQ are vulnerable to big losses and decisions many a time are gambles. Then again, one big win may cover all loses. If he or she is lucky, a 1000X gamble will propel him or her ahead of the higher IQ herd who are in a way limited by conventional wisdom.