Is Warren Buffett or Charlie Munger Smarter?

[LR1400]

If we distill this down to business in general I think IQ is of even less importance.

 

A certain salesmanship and savvy communication/charismatic skill is much more important. That is also a skill and can be learned but I think it’s as easy to learn than calculating intrinsic value of a business. It takes tough skin and lots of rejection.

 

Pure hard work, drive, desire to achieve a certain goal is also of equal importance in my observation.

 

Taking action. Is the final key. Obviously taking action irrespective of potential outcome is stupid but if you are 80% there go with it.

 

Taking that final step and committing to action is where the successful versus unsuccessful often diverge.

[Cigarbutt]

If you choose to be something different than a "reasonable" investor and think that you combine the necessary attributes (IQ, business savvy, behavioral edge), you have to consistently come to conclusions that are different from the wisdom of the crowd AND act accordingly (AND be right). It is much easier to fail conventionally.

 

I think that Mr. Buffett and Mr. Munger have consistently tried to lower expectations as the odds tend to be against you.

The argument of who is smarter may be irrelevant. Investment decision making is an individual exercise and I understand that Mr. Buffett continues to work alone behind his desk. He was able to find a way to work with somebody who had complementary skills, who could rapidly understand a situation and who could almost instantaneously provide unfiltered high quality feedback. It seems that this investment process has worked out fine. 

 

When the "modern" investor is mentioned, does it imply that Mr. Buffett and Mr. Munger:

 

a)have lost their touch?

b)can no longer adapt to changing environments?

c)size is just too large?

d)value investing is dead?

 

I'm asking since I still consider them to be the golden standard.

[Cardboard]

"They were good for their day but they are both hopelessly outclassed by modern investors."

 

Part of these Scott?

 

Why don't you post that link to that video where you are sitting down on your couch with your cat so that people here could learn what a true winner looks like?

 

Cardboard

[nickenumbers]

If you choose to be something different than a "reasonable" investor and think that you combine the necessary attributes (IQ, business savvy, behavioral edge), you have to consistently come to conclusions that are different from the wisdom of the crowd AND act accordingly (AND be right). It is much easier to fail conventionally.

 

I think that Mr. Buffett and Mr. Munger have consistently tried to lower expectations as the odds tend to be against you.

The argument of who is smarter may be irrelevant. Investment decision making is an individual exercise and I understand that Mr. Buffett continues to work alone behind his desk. He was able to find a way to work with somebody who had complementary skills, who could rapidly understand a situation and who could almost instantaneously provide unfiltered high quality feedback. It seems that this investment process has worked out fine. 

 

When the "modern" investor is mentioned, does it imply that Mr. Buffett and Mr. Munger:

 

a)have lost their touch?

b)can no longer adapt to changing environments?

c)size is just too large?

d)value investing is dead?

 

I'm asking since I still consider them to be the golden standard.

 

 

"I have nothing to add." [Mic Drop..] 

[nodnub]

Does anyone remember when this forum was a place of mutual respect, despite different viewpoints?

 

It's disappointing to see that so many discussions on this forum are devolving into personal attacks. 

 

If someone says something you disagree with, attacking the idea instead of the person... adds a lot more to the discussion.

[LC]

If you choose to be something different than a "reasonable" investor and think that you combine the necessary attributes (IQ, business savvy, behavioral edge), you have to consistently come to conclusions that are different from the wisdom of the crowd AND act accordingly (AND be right). It is much easier to fail conventionally.

 

I never liked this part of the quote. Can't we both be right? Maybe you sell your BRK to buy BAM and I buy your BRK and we both make great returns. The whole zero-sum thing bothers me because I think of investing as a value-adding activity which grows the pie over time

[Cigarbutt]

The ideal scenario is that we are both right.

However if we take different sides, I know which side I want to be on. :)

 

The average reasonable investor who did not get caught up in fees, rapid turnover and inopportune buy/sell decisions has done amazingly well over time and that's great.

The comment had to do with the difficulty of trying to be better than the average (from the perspective of an individual investor and /or a fund manager).

 

That fact that markets are not perfectly efficient is actually a great thing. Don't you agree?

Competition can be healthy (up to a certain point).

 

Quotes from Howard Marks:

 

"You can’t do the same things others do and expect to outperform."

 

"Inefficient markets do not necessarily give the participants generous returns. Rather, in my view that they provide the raw materials — mispricings — that can allow some people to win and others to lose on the basis of differential skill."

 

[ScottHall]

"They were good for their day but they are both hopelessly outclassed by modern investors."

 

Part of these Scott?

 

Why don't you post that link to that video where you are sitting down on your couch with your cat so that people here could learn what a true winner looks like?

 

Cardboard

 

There's no need to be modest, Cardboard. Everybody knows you are one of the greats I was talking about. Your track record of calling out FRAUDULENT companies early in their hype cycles is truly unparalleled and ensures nobody will ever forget your contributions to our field. You've been a big inspiration to me as an investor, and are one of my most valuable resources on this entire website.

 

Thank you for being you, Cardboard. And please keep posting the ideas.

 

<3

[netnet]

Sorry, but what a stupid question.

 

Impossible to quantify.

 

Who's more athletic.....MJ or Lebron, Kobe or Shaq, Antonio Brown or Julio Jones....

 

Nope, general intelligence is extremely easy to quantify. And furthermore, something doesn't have to be quantifiable to be determinable.

 

Your follow-up questions are also easy to determine through empirical testing (it might not be easy for you to get that specific testing done though).

 

That being said, I agree with the suggestion that there are probably more productive things to ponder.

 

Your last statement is true, so were I more intelligent, I would not make this post ;)

Presumably, everyone or almost every one reading this has an above average IQ.  So, to a certain degree we have, shall I say, a dog in this fight.  So after those two caveats, let's go on to your statement about general intelligence. 

 

Yes, you can give intelligence tests, and these tend to be the most robust of psychometric testing, but a) there are different cognitive abilities, b) the science is not really settled and c) more controversially I would argue that the .96 correlation between tests for the same individual over relatively short time frames begs the question.

 

This does not even address the various aspects of cognitive abilities.  Can either Buffett or Munger envision and rotate a particular hydrocarbon molecule in their heads? Who knows and it doesn't matter. (One of my college roommates could do this, to the considerable envy of the rest of us trying to keep up in organic chemistry.)

 

I think you are wrong on the athleticism question as well. (Although, the comparison of IQ with athleticism is somewhat apt.) Jose Altuve and Lebron James are both tremendous athletes, (that would test out well) but they have more.  Not to be woo-woo, but they both have the intangible psychological make up, which may be analogous to the rationality and temperament factors. Furthermore, you have to match the athlete's gifts to the right sport. (see Michael Jordan and baseball.)  I would hazard a guess that Lebron would never be a top collegiate swimmer. If the testing were so easily accomplished (non-injury) draft bust would not happen!

 

So he IS saying you need a 120-130 IQ. This is WAY above average/median.

By all accounts, Walter Schloss was a dim bulb, yet was a successful investor.  And I doubt, that even in Warren and Charlie's circle a

120 IQ would be a dim bulb!

[Cardboard]

LOL!

 

The thing is that I never have and never will consider myself to have "outclassed" Warren Buffett nor Charlie Munger or an affirmation that you have made.

 

You probably should write a book Scott or start a blog. I mean why are 50,000+ fools going to Omaha each year to see these dinosaurs that have you have successfully outclassed? Why millions bother reading Buffett's annual letter?

 

You are the new oracle!

 

Cardboard

[Dynamic]

If you choose to be something different than a "reasonable" investor and think that you combine the necessary attributes (IQ, business savvy, behavioral edge), you have to consistently come to conclusions that are different from the wisdom of the crowd AND act accordingly (AND be right). It is much easier to fail conventionally.

 

I never liked this part of the quote. Can't we both be right? Maybe you sell your BRK to buy BAM and I buy your BRK and we both make great returns. The whole zero-sum thing bothers me because I think of investing as a value-adding activity which grows the pie over time

 

I think it's sensible to divide things up into two games that occur at once:

• The positive-sum game is investing as a whole - owning the market of pieces of publicly traded companies and collecting their dividends generally produces positive returns over long time frames.
  
• The zero-sum game is where investors can get an edge and outperform the market as a whole, and this can be by being selective in the companies chosen as well as the prices paid and received. I think that Value Investors to some extent provide a service in limiting irrational underpricing during distressed markets and may be rewarded with outperformance. Likewise, some buyers may rationally accept low risks in a certain sense that matters to them (solvency risk, dividend reduction risk, volatility etc.) in exchange for lower returns, while some value buyers get to reduce risk of losing funds and increase returns simultaneously by buying with a large margin of safety. Likewise I think that fearful instinctive investors who buy high after a run-up and sell low in fear tend to be on the losing side of the zero-sum game over time and hamper their long-run returns. And of course there's an element of luck involved.
  

[compounding]

Sorry, but what a stupid question.

 

Impossible to quantify.

 

Who's more athletic.....MJ or Lebron, Kobe or Shaq, Antonio Brown or Julio Jones....

 

Nope, general intelligence is extremely easy to quantify. And furthermore, something doesn't have to be quantifiable to be determinable.

 

Your follow-up questions are also easy to determine through empirical testing (it might not be easy for you to get that specific testing done though).

 

That being said, I agree with the suggestion that there are probably more productive things to ponder.

 

Your last statement is true, so were I more intelligent, I would not make this post ;)

Presumably, everyone or almost every one reading this has an above average IQ.  So, to a certain degree we have, shall I say, a dog in this fight.  So after those two caveats, let's go on to your statement about general intelligence. 

 

Yes, you can give intelligence tests, and these tend to be the most robust of psychometric testing, but a) there are different cognitive abilities, b) the science is not really settled and c) more controversially I would argue that the .96 correlation between tests for the same individual over relatively short time frames begs the question.

 

This does not even address the various aspects of cognitive abilities.  Can either Buffett or Munger envision and rotate a particular hydrocarbon molecule in their heads? Who knows and it doesn't matter. (One of my college roommates could do this, to the considerable envy of the rest of us trying to keep up in organic chemistry.)

 

I think you are wrong on the athleticism question as well. (Although, the comparison of IQ with athleticism is somewhat apt.) Jose Altuve and Lebron James are both tremendous athletes, (that would test out well) but they have more.  Not to be woo-woo, but they both have the intangible psychological make up, which may be analogous to the rationality and temperament factors. Furthermore, you have to match the athlete's gifts to the right sport. (see Michael Jordan and baseball.)  I would hazard a guess that Lebron would never be a top collegiate swimmer. If the testing were so easily accomplished (non-injury) draft bust would not happen!

 

So he IS saying you need a 120-130 IQ. This is WAY above average/median.

By all accounts, Walter Schloss was a dim bulb, yet was a successful investor.  And I doubt, that even in Warren and Charlie's circle a

120 IQ would be a dim bulb!

 

I don't really think this discussion is what the original post of this thread was about (this is magnitudes more interesting), so I think you can be excused for responding. :)

 

If you read a little bit more carefully what I wrote, you would see that the main thing I objected to with my original response was that intelligence can't be quantified, or that athelticism can't be quantified, which it clearly can. You can argue that there isn't a quantification method that perfectly encapsulates cognitive ability, but that wasn't what I argued for in the first place. And I think the evidence for IQ testing is pretty darn strong.

 

I think the scientific consensus on intelligence disagrees with b) and c), and perhaps a) although that is very vaguely stated. If you are talking about Emotional Intelligence or something like that, you are quite frankly not in agreement with the scientific consensus, but if you are referring to verbal intelligence as being different from e.g. mental rotation, I would agree with you. I'm not really sure I understand what you mean by using it as a counter argument vis-a-vis IQ testing though, because IQ testing includes a broad variety of cognitive abilities. I could provide you with links supporting these claims, but it should be easy enough for you to find it yourself if you are genuinely interested.

 

Again, you are putting up a straw man with regards to the athleticism argument. I never said psychological make-up wasn't important for elite athletes (it clearly is), I argued with the claim that athleticism isn't quantifiable. I agree with you that different sports have different requirements, although I would disagree with MJ being a case in point. I mean, the guy played professional baseball with basically no real training since childhood, so I would even say that's a pretty good counter argument to your point. I also personally think you underestimate how physically and mentally gifted LeBron James is in terms of being an elite athlete (an argument I never though I would be able to honestly argue). Although I can't prove it, I think it's pretty likely that he could have been a professional athlete in a bunch of sports different from basketball, had he dedicated his life to another sport. If you want a parallel to intelligence and Buffett, I think he probably could have been successful in any given intelletual field, with sufficient dedication (a point Munger has made as well, by the way).

 

It's getting a bit tiresome making the same point over and over again, but your argument about the draft being easy if athleticism is easily quantifiable is also quite obviously not true. You even made the argument yourself that raw physical ability isn't the only thing that determines success in sport, so why would quantification settle the issue of draft prospects?