Dollars and Jens
Thursday, December 04, 2003
 
Re: behavioral finance
I would assume that when they refer to "reversion to the mean", they aren't referring to a reversion to a lower price, they're referring to a lower rate of appreciation.
As Buffett said in a 1999 interview with BusinessWeek, "Success in investing doesn't correlate with I.Q. once you're above the level of 25. Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing."
Elsewhere, I've seen him state that the difference in investment results between someone with a 130 IQ and someone with a 160 IQ is entirely temperament, but go on to point out that his example didn't use a 100 I.Q. Incidentally, Dean, if you haven't read the Cialdini book that Munger recommends, I can lend it to you at Christmas.

- posted by Steven @ 7:54 AM

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