Last Updated on December 17, 2024
Overview – Nature or Nurture: The Endless Debate
You’re probably familiar with the “nature vs nurture” debate, the age-old argument of whether we can improve/develop/progress through hard work and effort, or if we are victims to the whims of “destiny” or circumstance and can’t possibly hope to change certain traits, regardless of how hard we work.
This debate arises in various endeavours, whether academics, athletics, or the arts. Unfortunately, investing isn’t spared from this debate.
It doesn’t take long to realize that, empirically speaking, it seems like some investors can succeed without putting in much work, whereas others need to exert themselves quite a bit to achieve a comparable level of success. So, is investment success something that only a “select few” can achieve, or can it be accomplished by anyone given enough time and effort?
As we’ll discover in this article, investment success is, for the most part, a mixture of nature and nurture, but the balance between these elements will vary between investors.
Different Investors Have Different Aptitudes
It’s no secret that different people are more naturally skilled or gifted at certain things than others. Some athletes are stronger and more athletic than their competitors, some students can absorb and understand concepts more effortlessly than their classmates, and some pianists require less rehearsal time to master a piece than others.
Similarly, it should be no surprise that different investors will naturally be more skilled at certain things than others. These aptitudes/innate strengths don’t have to be anything fancy: something as relatively “mundane” as staying calm under pressure is enough to set an individual investor apart from the crowd.
Despite the prevailing belief that only a “select few” are given innate abilities, every investor has something they are naturally good at that can benefit their careers. The challenge is finding which specific aptitudes these are. Who knows, after some introspection investors may surprise themselves.
Now, this isn’t to say every investor will be a prodigy at something, but is instead a reminder to take a good look at themselves and ensure they’re making the most of what they have to work with. Knowing how to maximize your strengths as an investor is a valuable skill, especially when making the most of your innate strengths.
An Investor’s Aptitudes Can Give Them an Advantage, but They Won’t Be Enough
Although an investor’s aptitudes can be greatly beneficial, relying solely on what they’re naturally good at won’t be enough to achieve meaningful investment success. This is because, much like any other endeavour, innate competencies alone don’t encompass all of the required skills needed to do well, let alone succeed.
For example, some doctors are gifted with excellent memories, allowing them to retain all sorts of vital information needed to perform their work. However, naturally superb memory alone isn’t enough for them to succeed; a multitude of other skills such as critical reading, problem-solving, being empathetic, and knowing how to effectively communicate with their patients are also required.
Having a strong memory can certainly give them an edge, but relying solely on it won’t be enough.
Similarly, some investors can have certain aptitudes such as being naturally strong in numeracy or knowing how to read between the lines, but these are just some of the many skills needed to achieve lasting success in investing.
Given the variety of skills investors need to do their work, it’s highly unlikely for anyone to be a “natural-born investor” – that is, to inherently possess all of the necessary skills. There will always be skills that will either need to be developed or improved upon.
Many of the Skills and Competencies Investors Need Must Be Developed
No matter how many aptitudes someone may have, only a select few will be applicable to investing. In addition, these handful of relevant aptitudes may not be at an appropriate level of sufficiency needed for investment-related work. If that’s the case, what can investors hope to do?
Fortunately, there’s a solution: many of the skills that investors don’t already have can be learned and developed. The argument can even be made that most of the skills investors will need will have to be developed anyway. Numeracy, analytical reading, problem-solving, connecting bits of information, uncovering potential risks/red flags: very few, if any, people will naturally possess all these skills at a very high level.
As we briefly mentioned earlier, even if an investor has multiple, relevant aptitudes, this doesn’t mean they can’t be improved or further refined. Just because someone is naturally good at math or naturally good at picking up on details doesn’t mean there’s no need to fine-tune these talents.
Therefore, no matter how naturally talented an investor may be, there will always be an element of “nurture” involved. Whether it’s developing certain skills they don’t already have, or improving the aptitudes they do have, achieving success in investing will always involve putting in the necessary work.
Investing Success Is a Mix of Nature and Nurture but to Varying Extents
Many investors have, to various extents, certain aptitudes that can give them an edge. Whether it’s being naturally good at crunching numbers or having an excellent eye for detail, even seemingly “mundane” talents can prove to be a differentiating factor for investors.
Regardless of how talented they may be, no investor will naturally possess all of the required skills needed for them to perform their work, nor will their aptitudes always be refined enough. To make up for these missing skills and competencies, investors must put in the time and effort to develop them.
With these things in mind, it’s clear that achieving success as an investor is a matter of both nature and nurture. That being said, the extent to how much nature or nurture influences investors will vary significantly. In other words, some investors will lean more heavily toward “nature”, while others will lean more toward the opposite.
Figuring out what this balance is can help investors figure out how to better allocate their limited time and energy when it comes to their development.
An investor who possesses several, investment-relevant aptitudes won’t need to spend as much time acquiring new skills, but instead refining the aptitudes they already have. On the flip side, another investor may have fewer, though significantly more refined, talents, meaning they are better off spending most of their personal development on acquiring other skills.
Regardless of what this balance may look like, achieving success in investing will never be a matter of strictly nature or nurture, but will always require both.
Wrapping Up
When it comes to certain endeavours, some people believe that only a “select few” will have what it naturally takes to succeed, while others believe that, with enough time and effort, anyone can achieve success. This same debate can sometimes be brought up when it comes to investing.
Many investors, despite what they may believe, have natural traits and aptitudes that can give them an advantage, no matter how slight or significant it may be. However, talent alone won’t equip investors with all of the skills and competencies they need, meaning they still need to put in the effort to develop other necessary investment skills.
Therefore, achieving success in investing is a matter of both nature and nurture, but this balance will not be the same for all investors. Some investors may possess a significant number of relevant, yet undeveloped, aptitudes, while others may need to acquire various skills to complement their highly refined natural talents.
