Can Financial Intelligence ensure SUCCESS in Stock Market?

The general perception is, it will. A study done at the University of Pennsylvania suggests otherwise. As per it, there is a big downside of getting financially intelligent. And this is what it has to conclude. Financial intelligence increases the confidence levels in an investor which leads him to make worse investing decisions!

The same study reports - "finance courses increase confidence, but this could reflect overconfidence" .It also cites an example - "Over-optimism and over-confidence in finance decision making is widespread. In a 2005 survey, 65% of Americans believed they were 'very' or 'highly' knowledgeable about personal finance, although they performed abysmally on objective questions about the subject.

This sums up the reason why so many investors run into financial problems despite being financially intelligent. We believe financial knowledge in isolation isn't enough and should be combined with emotional intelligence with it as well for becoming a successful investor.

As Warren Buffett once said, "Success in investing doesn't correlate with IQ 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."

So, your financial intelligence or your ability to master the fundamentals can only improve you to a point. It helps you to build a strong base but the work you should do after that is your own and that is the work that will carry you forward. It means, you can learn trading techniques or investment principles from a good book or from an experienced person. Unfortunately, you cannot learn about yourself from any book or from any other person. So, when we are telling you that mastering emotions is a fundamental requisite for an investor, it simply means that your emotions can undo your work (by overriding your  financial intelligence)  because you will only know what is going on in your heart and head when your speculative bets or investment positions are going against you.

You may know a lot about the markets. You may even know … when to buy, when to sell, and which stocks have the potential to move. But how well do you know yourself?.. ... is all that matters the most.