Does Smart Investing Really Require a High IQ? Lessons from Buffett, Big Tech, and Brainpower

Debunking the IQ Myth in Investing

Warren Buffett once said,

"Success in investing doesn’t correlate with IQ... once you’re above the level of 125, it’s all the same."

This idea may surprise many aspiring investors who assume they need to be financial wizards to succeed. But according to Buffett—great investing is not about brainpower. It’s about discipline, emotional control, and understanding the business behind the stock.

So, if investing isn't about raw intellect, what is it about? Let’s unpack this idea and see how the Rule #1 investing strategy leverages focus and emotional discipline rather than a supercomputer IQ.

The Two Worlds of Investing: AI Super-Brains vs. Rule #1 Discipline

On one side of the investing world, you have firms like Renaissance Technologies, where rocket scientists use AI and complex algorithms to exploit tiny pricing inefficiencies for short-term gains. Their job is not traditional investing; it’s software engineering for the markets. They’ve posted staggering returns, but their methods are inaccessible and irrelevant to everyday investors.

On the other side, there's Rule #1 investing, which focuses on long-term ownership of wonderful businesses bought at attractive prices. This method isn’t about being a genius—it’s about doing the work, understanding the company, and having the discipline to wait for the right opportunity.

Why Investing Gets Harder (But Not Smarter) As You Get Richer

Investing actually gets harder as your portfolio grows—but not because it requires more intelligence. It’s because the universe of viable investments shrinks.

For example, Buffett can’t buy a $1 billion company and expect it to move the needle on Berkshire Hathaway’s massive $300+ billion cash hoard. He has to wait for rare opportunities in massive companies like Apple.

Meanwhile, individual investors with smaller portfolios have more flexibility. A great $1 billion company that doubles in three years could have a significant impact on a $10,000 or $100,000 portfolio. This is a key advantage that individual investors often overlook.

Understanding Uncertainty: The Google Antitrust Case as a Case Study

Google is a classic example of a monopoly—a company with a wide moat—but that dominance has attracted antitrust scrutiny.

Investors who don’t understand the business might panic, but those who do can take a rational approach:

• Game out worst-case and best-case scenarios.

• Consider if a breakup could unlock more value (like the Fiat-Chrysler and Ferrari spin-off).

• Assess whether regulatory risks are already priced into the stock.

We used AI tools to estimate the breakup value of Google, concluding that it could be worth as much or even more split up. That kind of insight comes not from IQ, but from doing the research.

Monopoly Moats vs. Market Fairness: Where Investors Must Pay Attention

Moats like Google’s dominant search engine or Amazon’s scale offer pricing power and protection from competitors—hallmarks of great businesses.

But with those advantages come risks:

• Regulatory challenges

• Public backlash

• Changes in global trade and geopolitics

A smart investor tracks these risks and adjusts accordingly. The key is staying informed and understanding how potential changes affect the long-term value of a business.

What to Do When the Future Is Fuzzy

Uncertainty is a constant in investing. Whether it’s an antitrust case, a global pandemic, or geopolitical tension, smart investors don't rely on predictions. They rely on preparation.

Here’s what Rule #1 investors do:

• Understand the business before buying.

• Stay within their circle of competence.

• Create scenarios for how the investment could unfold.

• Be willing to change their minds when new facts emerge.

That’s exactly what Buffett did with Apple—once calling it a "forever" stock, then selling down a large portion of the position as conditions changed. Flexibility, not stubbornness, is the mark of a great investor.

Key Takeaways: Smart Investing Is About Doing the Work

So, does investing require a high IQ? According to Buffett: no. What it does require is:

• Emotional control

• A willingness to learn

• Discipline to wait

• The ability to stick to your investing principles even when the crowd panics

Whether you’re considering buying Google, Chipotle, or a small local business, the same rules apply: understand what you own and why you own it.

Next Steps: Learn How to Invest the Rule #1 Way

If you’re ready to start investing with confidence—regardless of your IQ—join our Rule #1 Investing Workshop and discover how to:

• Find wonderful businesses on sale

• Calculate their true value

• Invest with confidence, even in uncertain times

Smart investing isn’t about brainpower. It’s about taking the time to do it right.