Intelligence

I believe that our brains are like filters—they stand in the way of our soul, what is essentially infinite intelligence—and the world around us. Those of us with really good filters are considered to be “dumb.” Those of us with really bad filters are considered to be “smart.” The brain is just an organ. We can have good hearts, good lungs, or good brains. I have a good brain with a Mr. Magoo body. We are all differently abled.

And I truly believe that—that isn’t just hokey bullshit. I really do believe that we are all differently abled. I got a good brain, a brain that is good with writing and math and music, but you know what it’s not good at? Spatial relationships. When I look at a car engine, I see a tangled mess of tubes and pipes. I have no idea how it works. I can write books, I can trade derivatives, but I cannot fix a car. Someone four standard deviations below me in IQ can fix a car. So I don’t spent a lot of time or energy looking down on people who I consider to be dumb, because we are all good at different things.

I’ll go further on this, about the spatial intelligence. If you’ve ever taken an in-person IQ test as a kid, you know that they give you those blocks with the triangles on them that you’re supposed to form shapes with in a certain amount of time. Man, I was terrible at that. I simply can’t think in 3D. I could never be an engineer, or a general contractor. I cannot fly a helicopter. When I was qualifying as deck watch officer on the ship, I had to draw a schematic of the fire main. I found it to be the hardest part of the qualification process. So the funny part about this is that my IQ is X, but my performance on spatial intelligence is X – 30, which means that my performance on the rest of the exam must be X + 30—truly exceptional. But I can’t put IKEA furniture together. It also means that I am uniquely suited to trade delta one instruments, because trading volatility means that you have to think in three dimensions. When Lehman jammed me in index arbitrage in 2001, they were actually doing me a favor, though I didn’t realize it at the time.

I did well on the SATs, both in math and verbal. Actually, my best test result was the GREs, which I took in 1995. If I were to take them today, I would probably get an 800 on the verbal, and significantly lower on the math. Though, I always had a beef with the reading comprehension part of the verbal SATs. They had you reading an impenetrable fog of academic drivel, stuff from the Sokol bullshit generator, and while I suppose this is appropriate for a test of scholastic aptitude, in real life, nobody reads this stuff. I didn’t do as well on the GMATs. I was one of the first people to take the test on the computer, and I took it ice cold, while I was in the Coast Guard, in between deployments. It was more than good enough to get me into business school. Anyhow, these are not really tests of scholastic aptitude, except to the extent you remember your geometry from 8^th grade—but intelligence tests. Nobody is using them anymore, which is the dumbest thing out of all dumb things.

There have been some debates about IQ in recent years, and its usefulness. I think IQ is a decent measure of intelligence, but it does not capture all kinds of intelligence. Specifically, emotional intelligence, something I’m a bit challenged in. But IQ is a statistical measure, and it follows a normal distribution. Most people know this already, but in case you don’t: mean IQ is 100, and one standard deviation is 15. Someone with an IQ of 145 is three standard deviations above the mean, which is pretty rare—about one in a thousand people. The highest recorded IQ is about 200, which is Good Will Hunting levels of intelligence. I read a story about a guy with a 200 IQ once—he has not been successful. In fact, there seems to be a “sweet spot” in intelligence—successful people in a variety of fields tend to cluster between 130 and 145 IQ. I don’t know why this is—maybe there is such a thing as being too smart for your own good. I have met some highly intelligent people in my life—remember, I went to the most notorious gifted and talented camp in the world. Let’s just say that the vast majority of them are not in a position to donate back to the program.

I think we place a bit too much emphasis on how smart people are, and not enough on their character. I did a bit of social engineering in my class this semester: I put in the syllabus that if a student completed all the assignments and handed them in on time, then they would get no lower than a C, regardless of how well they did on the exams. There are three students in the class whose performance on the exams are so poor that they would be in a position to get a D or an F, but they’re being rewarded for their conscientiousness. My view is that someone who shows up and puts in the work deserves to get a middling grade, at a minimum. Of course, the students who do all the assignments tend to get the high grades, and the students who don’t hand things in on time tend to get the low grades, but then you have the grinders, the kids who try hard in spite of their weaker intellect. This is the way.

Intelligence doesn’t count for everything. Look at the case of Vivek Ramaswamy—high intelligence without virtue. I have taught a lot of students over the years, and I have had a lot of interns, and I can tell you that the correlation between intelligence and success is pretty weak. Over the course of these essays, we have talked a lot about what it takes to be successful. I think the first precondition for being successful is wanting to be successful. Wanting it more than sex or food. The successful ones have an obsession to learn and grow. The unsuccessful ones are complacent. Of course, when you have someone who is smart and driven, that is a deadly combination. With our God-given talents, and this organ we call a brain, we each have a certain amount of potential. The question is: are you realizing your potential? This is something I think about a lot—have I realized my potential? A lot of times, I don’t think I have—but more will be revealed.

About the gifted and talented camp—it was called CTY: Center for Talented Youth. I knew a girl there, age 14, who got a 1600 on her SATs in seventh grade, who was working for NASA. Knew a guy who published his first academic paper in computer science at age 14. There was a 9-year-old there, taking probability and statistics. Mind-bogglingly intelligent people, and I was clearly in the bottom half. The vast majority of these kids went on to Ivy League schools. I was probably the only one to go to a service academy, and my MBA program was ranked 170^th in the country. The point of telling you this is that for most of my adult life, I have been on the outside of this academic elite, looking in. I don’t have the pedigree, so I am partial to people who don’t have the pedigree. The scrappers. The hungry. The poor, smart, and determined. I think a lot of these people who went to Ivy League schools are assholes, because they’ve been told how smart there are over the course of their entire lives. No humility, and as you know, humility is a very important quality when you’re managing money.

Some people will dispute me on this, but while I was at Lehman, I heard that the firm had an informal policy of not hiring anyone from Harvard. Allegedly, these folks from Harvard would be at the firm for three months and would be telling everyone how to do their job. A big part of intelligence is knowing what you don’t know. I’ll tell you what two things are a dime a dozen—smarts, and good looks. Patience, tolerance, kindness and character are commodities in shorter supply. When I was a kid, I used to think that being smart was enough. Now, I know it’s not even the beginning of the beginning.