[jwheeler79]

No need to dress up wisdom with unsubstantiated scientific language? Where do you get that? He sounds plainly spoken to me.

He's not saying high I.Q. doesn't have its advantages at all. He says overly high I.Q. doesn't give you an advantage when it comes to investing and there are plenty of examples.

Probably the biggest one from your M.I.T. alumnus, a partner in Long-Term Capital Management[1], creators of the Black Scholes Formula for options pricing. Their firm lost billions of dollars because said "perfect" hedging formula failed to account for shit going south in Russia one day.

It doesn't take a genius to observe a few really smart guys drawing some conclusions based on Brownian Motion, and the thing works most of the time, until someone tosses a boulder into the particle system and fucks everything up.

Don't forget about the fellow who whined: "I can calculate the movement of the stars, but not the madness of men" when he lost today's equivalent of 2.5M in the South Sea Bubble[2]. That'd be Sir Isaac Newton.

[1] https://en.wikipedia.org/wiki/Long-Term_Capital_Management [2] http://en.wikipedia.org/wiki/South_Sea_Company

[clarkm]

I don't disagree -- I think of markets as generally anti-inductive, so over-thinking things is a definite risk. And some quants have the habit of developing models so complex that when conditions change, they can't figure out how to adjust them.

I'm just saying that Buffett's quote sounds like the abstract from some scientific paper. I'm surprised he didn't include a p-value.