Like dieting, investing is simple but not easy, noted Jason Zweig in his book, The Little Book of Safe Money. Its not so much about who is the smartest at picking stocks or timing portfolio moves; its more aboutdiscipline and sticking to a long-term plan.
If investing were about brains, one might expect the Mensa Investment Clubto be beating the market, says Larry Swedroe in his latest book, The Quest for Alpha: The Holy Grail of Investing. They’re not. Members of Mensa have scored better than the 98th percentile on a standard IQ test, but their investment club has underperformed quite noticeably.
The June 2001 issue of S martMoneyreported that over the prior 15 years, the Mensa investment club returned just 2.5%, underperforming the S&P 500 Index by almost 13%, writes Swedroe. The performance hasnt gotten much better. Since early 2005, the clubs portfolio has lagged the S&P 500 by a wide margin, according to the club’s website. It holds about 6 stocks, including Hasbro Inc., Coca Cola, UPS, and Limited Brands.
The story is similar for Robert R. Prechter Jr., the publisher/editor of the Elliott Wave Theoristnewsletter. He is a graduate of Yale University and belongs to the Triple Nine Society. To belong to the latter organization, members have to be abovethe 99.9th percentile on the IQ scale. So Prechters a super smart guy but his predictions and advice haven’t been particularly outstanding, as far as I can see.