Are Investing Skills Something You're Born With or Learn Later On in Life?
Everyone on this forum could agree that anyone with an average IQ and the discipline to work long hours can make it in IB. However, I think the same doesn't seem to hold as true for the HF industry.
In IB or even in PE, we all know that hard work, dedication, and good social skills are pathways to success. However, when it comes to HFs, I feel like it's not as simple as just putting in the hours. Maybe you can read books and study technical analysis to become a better investor, but to what extent do these efforts truly impact your overall performance?
So, my question is: Are investing skills something you're born with or learn later in life? After all, while everyone can learn to play the piano or solve complex mathematical problems, there are always individuals who excel at these things with minimal effort. Does the same logic apply to investing?
Do you believe that innate talent plays a significant role in investing, or is it all about the effort and knowledge one accumulates over time?
Fwiw Buffett has said that he thinks it's an innate talent
I don't think this is true. He himself said he used to lose money due to following the wrong strategies, etc., which implies that clearly it's not 100% innate. I think he said this in the context of temperament being possibly innate, and that people either get the philosophy behind value investing or don't, but this is very different than just saying somehow people are just born out to know how to invest well.
There's something called a 'growth mindset' which is the idea that you should treat and approach everything in life as a learnable skill. Obviously genetics, iq, etc play a role. But you're going to be more productive and positive if you take that approach rather than consigning yourself to being 'good', 'bad', 'gifted' at things.
I don’t think anyone who has succeeded at something has done so with “minimal effort”
I’m pretty sure most people define genius as highly gifted and incredibly hard working. You can’t control the first but you sure as hell can control the second so would focus on that.
Also, what does it mean to be born with investing skill? Lol
it's teachable, think about the combination of the following scenarios:
1. fundamental analysis i.e. investing based on the real value of a company: Buffett, Ackman (sometimes), etc. - you need to understand accounting, to understand businesses, etc. etc. - you just need to read a lot and outcompete the other millions of investors that compete with you in this market
2. generally investing in the public market - good tolerance of risk, basing decisions in some finance/economics knowledge, being a critical thinking (i.e. having the lowest amount of flaws/biases in your investment thesis and most importantly: being right - see point 3).
3. and then, the result of one's investment: Luck - what's outside one's control.
so where exactly would you see talent around here? think that what makes one a good investor is being contrarian (going on the contrary or general/popular ideas), and being contrarian is something totally unnatural for people, so people also learn it.
on the remark about Buffet saying that it's somewhat of a talent I would call it bullshit. Think about Buffet's background: He lived during the 1929 stock crash (and as others such as Bogle, etc. this historical event made them interested in the stock market and on saving every penny = extremely basic foundations of finance but which go a long way) --> his father was a stock operator or something similar (reinforces his interest for the stock market, etc.) --> he was also quite of a nerdy kid and liked sport statistics, maths, etc. --> he got into a good school, he had it crystal clear what he wanted to do in life: investing in stocks, so he chose a university program where Graham was the teacher/he went at Wharton/Princeton (? not sure which one) only to study about investing i.e. everything he studied passed through the "investing" lens -> he got mentored by Graham --> he began/developed his investing career in a period of extremely inefficient markets where investors were pure speculators (extremely easy to make big returns) and their business acumen was primitive. So it's not as much talent as being exposed to a lot of circumstances, using one's strength, and really understanding what one want to accomplish and not falling into distraction (you also need to be autistic in its own way to really don't be interested in nothing else since you were kid, but kudos to Buffet for sticking to his dream).
Anyway, the most important description of investors is that they're "risk managers", they can't predict the future, but they can just take calculated risk, and the more you know and the more you read, the better you understand how big of a risk something it is, from where unknowns could come, how hard it will hit you, if it's worth it/not, etc. etc. You can't predict the future, but you can minimize at maximum the risk by being less of an ignorant.
You can minimize the risk, but at the end it's still reliant on innate talent/luck whatever you want to call it
Which you don't know if you even have beforehand, because before that anyone who works hard has a shot which disguises talent
Like professional athletes, those guys all work hard. At the end of the day there's things you can't teach: Roger Federer, Lebron James ...
The skills are teachable but the instincts are not.
I can learn to dribble, pass and shoot a soccer ball. And I may be able to do any of those at an a+ level. But to do them all without thinking and then see the way to put them all together is something that is unteachable.
I highly doubt any of the greatest investors have succeeded with minimal effort. Most people who have consistently made money read for hours, no matter their seniority for example - that alone is a huge differentiator. What I think is much harder to learn is probably risk-taking ability, dealing with the stress of constant feedback that is thrown at you (esp. in public markets), and discipline - those seem more like values than talent but without them, it's hard to become a good investor.
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