Intelligence and ER

Hey guys - this is a weird q so brace yourselves.

I'm a very very average person - I studied a non-finance humanity degree, not gifted at numbers, IQ is probably bang average, however, I'm quite a personable person and a decent communicator. 

Despite the above, I managed to land an ER gig at a BB firm. (I think the only reason why I managed to get the job was that I made a good impression on the right people - not much to do with techincal skill) People who know me are surprised when I tell them lol.

 I guess what I'm trying to ask is: how intelligent do you truly have to be doing well in ER and to pass the CFA exams? Can I just work hard, or will there come a point where my lack of natural intelligence will become obvious to everyone around me? 

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Comments (13)

Apr 26, 2021 - 7:56pm

Determination and grit are more predictive of success than raw intelligence.

I'm paraphrasing PG here, but imagine a theoretical person that has 100 attribute points in intelligence and 100 attribute points in determination.

If you keep removing points from determination while keeping intelligence unchanged, eventually you end up with an ineffectual, hapless person.

On the other hand, if you keep determination at maximum but keep removing points from intelligence, eventually you end up with a guy that runs a waste disposal business or  owns a bunch of taxi medallions (pre-Uber, of course)

Moreover, the mere fact that you have the self-awareness to ask this question means you are not under the Dunning-Kruger effect and you are probably above average / going to be just fine.

Apr 26, 2021 - 10:25pm

So, yes, you can make it in equity research but you have to play to your strengths. Remember at the end of the day, ER is a sales job. I've seen people have a good bit of success having the shittiest models on the planet and having absolutely no insights, yet they love to socialize with management teams and clients.

Now the real question is what do you mean by "personable and a decent communicator"?  On a scale of 1 to 10, these guys were probably a 6 in intelligence. On social intelligence, they were like a 9 or 10.  If you've got a 9 or 10 in social intelligence, there is a niche to play in ER where your research is really bad but you can still carve out an area to make it work.....8 is not good enough.

Another thought is to give S&T a try. If you're an ER associate of average intelligence, you'd probably be the smartest S&T guy in the group. I've seen some very good S&T guys who almost straddle being a sales guy and a research guy. In my opinion, S&T guys, who really understand the research on a deep level, can add a lot of value to clients and can do quite well for themselves.

  • Research Analyst in ER
Apr 27, 2021 - 3:11am

In my opinion you can probably have a decent early career in ER and maybe make it up to VP with secretly only averageish intelligence, as long as you can hide it behind strong technical skills, work ethic, attention to detail, personal polish etc. 
 

The problem comes as you start to get more and more coverage as a VP. I think once you hit 15 or so stocks it's going to get really hard to keep it all together. Think about how many facts and numbers you're going to have to keep in your head for each company, which your (hopefully growing) list of clients can call you up anytime about and ask to have an in-depth debate on (is consensus for company XYZ's division 4 fully factoring in softer demand outlook from end market ABC? Hope you can remember all the commentary management gave on that topic from the last couple earnings calls and all the recent news flow data points you saw on that topic). Also those numbers are facts and numbers are constantly shifting around, and it helps to remember where they were previously as well to contrast them where they are today. All the senior analysts I've seen at MD level (and senior VPs) have had extraordinary memories, and I think you'd find it hard to really perform at that point if you couldn't quickly absorb and retain large amounts of information, which is probably a big part of of what you're talking about when you say "intelligence". 

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Apr 27, 2021 - 2:21pm

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