Investors And Intelligence

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If you’re of the opinion thatinvesting in the stock market takes a certain type of intelligence and knowledge,you’d be right. A new study by Mark Grinblatt(UCLA), Matti Keloharju (Aalto University) and Juhani T. Linnainmaa (University ofChicago) titled "IQ and Stock Market Participation" concluded that the smarter youare, the more likely you are to invest in stocksand be successful at it. Using a database of Finnishinvestors covering the 20-year period 1982-2001, the evidence was quite conclusive:The lower the IQ of the individual, the lower the participation, which was trueregardless of gender or wealth. That’s thecase because low-IQ investors tend to make more mistakes, which deters them fromparticipating further. Their tendencies see them fail to diversify their portfolio inplace of reaching for big-name stocks they’ve heard of.High-IQ investors were more successful because they minimized theirrisk with better diversity and had broader exposure to stocks and mutual funds. Theyalso do more research to find the lesser-known value stocks.The bottom line is the smarter you are, the more likely you are toinvest in the stock market and be good at it.More onAskMen:The 10Most Horrendous Things Girls WearThe NewTablet Everyone's Talking About Continue Reading

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