Chapter 26 of The Winning Investment Habits of Warren Buffett & George Soros:
Do You Need to be a Genius?
“Warren may be as near to a genius at investing as I have observed.” — Paul A. Samuelson
“It was really to your benefit to talk to him [Soros] about it because he was smart.” — Allan Raphael
“He [Buffett] is the smartest man I have ever met, by a long shot.” — Rich Santulli
Clearly, both Soros and Buffett exhibit the hallmarks of genius. Both are investment pioneers; both developed their own original investment methods and applied them with outstanding success. Both are inventors and innovators, and could be considered the investment equivalents of Thomas Edison and Alexander Graham Bell.
Does this mean there should be a 24th Winning Habit: Be a Genius?
Perhaps — if you want to do everything that Buffett and Soros did, including inventing or perfecting an entirely new investment method.
But even if you do need to be a Thomas Edison to invent the light bulb, you don’t need to be a Thomas Edison to switch one on. Or to make one — after the genius has blazed the trail for the rest of us to follow. For investors, that trail is laid out in the mental habits and strategies that Buffett, Soros and other Master Investors all follow religiously.
As Buffett says, “You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with the 130 IQ.”
Buffett and Soros share many other characteristics. They both live in the United States, they have similar political opinions (for example, both helped fund Hillary Clinton’s Senate bid), they are both male and wear glasses. None of these is relevant to their investment success.
Intriguingly, they have one other thing in common: neither has passed any of the many securities industry qualifications that employees of Wall Street firms are routinely required to take.
When Buffett became CEO of Salomon Brothers in 1991, “there was also a rule that because I was an officer of a securities firm I had to take the Series 7 exam [for stockbrokers],” he recalls. “I kept delaying it until I left because I wasn’t sure I could pass it.”
Earlier in his career, Soros actually took such an exam — and failed it miserably.
“There came a point when they introduced a certificate for security analysts, a sort of professional qualification. After avoiding it for a while I sat for the exam and I failed in every conceivable topic. At that point I told my assistant that he had to take it and pass it. As I understood it, the importance of the certificate would not start to matter for another six or seven years and by that time I would either be so far ahead that I wouldn’t need it, or I would be a failure, in which case, I also wouldn’t need it.”
When the world’s two greatest investors fail or are afraid to fail such professional exams, one wonders what the true value of these qualifications is. If neither Buffett nor Soros has them, you certainly don’t need them to achieve investment success. What you do need to do is follow the same mental habits and strategies as Warren Buffett and George Soros. continued…
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