Quote for the Week
You have all these smart people out there. The money doesn’t go to the people with the highest I.Q. There would be a very poor correlation between I.Q. and investing and results. And you say to yourself why does somebody with a 500-horsepower motor only get 100-horsepower out of it? And I would say that if you look at the intellect as being the horsepower that’s available, but you look at the output as reflecting the efficiency of that motor, it is rationality that causes the capacity to be translated in output.
Now what interferes with rationality? It’s ego. It’s greed. It’s envy. It’s fear. It’s mindless imitation of other people. I mean, there are a variety of factors that cause that horsepower of the mind to get diminished dramatically before the output turns out. And I would say if Charlie and I have any advantage it’s not because we’re so smart, it is because we’re rational and we very seldom let extraneous factors interfere with our thoughts. We don’t let other people’s opinion interfere with it. We don’t get– we try to get fearful when others are greedy. We try to get greedy when others are fearful. We try to avoid any kind of imitation of other people’s behavior. And those are the factors that cause smart people to get bad results. — Warren Buffett (source)
From the Archives
Last Call
- Don’t Tell Me How I Am Doing – Klement on Investing
- Clickbait vs. Reality – Security Analysis
- No Big Loss – Humble Dollar
- When Low Risk Means High Risk – J. Rekenthaler
- Inflation Revisited – Verdad
- How I Think About Debt – M. Housel
- The Biggest Investor in the World – Net Interest
- How Athletes and Entertainers Get Financially Duped by Those They Trust – LA Times
- Caitlin Clark’s Not-So-Surprising Childhood – Range Widely