Emotional Intelligence, Not IQ, Is Most Important For Investors

The majority of us aren't geniuses. Luckily, The Irrelevant Investor’s Michael Batnick says emotional intelligence is far more important when it comes to investing than IQ.

“Too many people invest as if their success in one area of life will translate to market beating returns, without understanding that there is little correlation between brains and alpha,” Batnick writes.

He even quotes the great Warren Buffett, who once said, "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.”

Related Link: Warren Buffett's Advice For Younger Generations Investing In The Stock Market

In other words, emotional discipline and self-awareness are far more important to strong market returns than high-level thinking. You don’t have to be a genius to be patient, disciplined, confident, open-minded and level-headed, all of which are important characteristics of successful investors.

“Over the long-term, emotional intelligence will have a much bigger impact on your returns than your ability to out-think the market,” Batnick concludes.

Our instincts as human beings tell us to minimize risk by going along with what everyone else is doing, but that’s certainly not the best way to invest. At the end of the day, the ability to recognize and mitigate the host of cognitive and emotional biases that naturally cloud our investment decisions is far more important than a few dozen IQ points.