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Not Smart, but smarter
When I was young, I wanted to grow up and be successful. I mistook being rich to being successful and so I was trying to see how rich people got rich. I found out that some people got rich by luck (such as by inheritance), but many others seemed to have gotten rich by being spectacularly smart. So I always wondered: how do I become a “smart guy”?
But as I grew up, and became less dumb, I realized a few things:
Being rich doesn’t mean being successful.
The term “successful” is very much subjective. For example, you can fail at your job miserably, but be a successful parent.
The characterization of a “smart guy” is not entirely well defined.
The last point needs more clarification.
Intelligence is relative.
We often hear people claim someone is intelligent or smart. But it is all relative to others. If everyone had an IQ score of 150, having an IQ score of 150 does not make you intelligent.
But isn’t Warren Buffett an intelligent guy?
In his 1996 Shareholders letter, he said:
What an investor needs is the ability to correctly evaluate selected businesses. Note that word “selected”: You don’t have to be an expert on every company, or even many. You only have to be able to evaluate companies within your circle of competence. The size of that circle is not very important; knowing its boundaries, however, is vital.
Extrapolating this a bit further, we can evaluate Warren Buffet’s circle of competence in investing and compare it against mine, and it will be easy to conclude that mine is smaller (way smaller).
And so, we can claim that Warren Buffett is smarter than me when it comes to investing.
And if you think about it, the indigenous people of New Guinea are probably extremely adept at navigating jungles in the dark. I am sure most of us will get lost hopelessly in a dense jungle, and thus look dumb in the eyes of Papuans, when it comes to navigating.
So, you can’t become a “smart guy” (the word guy is used in a gender agnostic form here). You could become a “smarter guy”, as compared to a reference human; but comparing against others is a pursuit that never ends wells. A better idea is to compare against yesterday’s yourself and see if you are smarter or not.
In the next post, I will talk a bit more about how we can think about comparing circles of competence.
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