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 birth or circumstance and can’t possibly hope to change certain traits, regardless of how hard we work.
A classic example of the nature or nurture debate is our intelligence, specifically our IQs. There are some people who argue that our IQs are rigid and will rarely budge during our lifetimes, and there are those who argue that our IQs are malleable and can improve (or even deteriorate) over the course of someone’s life.
Unfortunately, the domain of investing is not spared from this debate. The argument can be made that some people are destined to succeed or fail, whereas some may argue that an investor has complete control over their investing journey and that success or failure depends solely on how much effort a person puts into investing.
Based on the investors I’ve observed, as well as my own experiences, I argue that investing success requires the right aptitudes as well as a prodigious amount of hard work and effort. The “nature or nurture” debate in investing is pointless because a successful investor requires both natural aptitudes and a strong work ethic.
Everyone is Wired Differently
There is no denying that all of us have unique talents and aptitudes; that is a fact that cannot be denied.
Some people understand math much easier than others, there are others who can think creatively without exerting much effort, and there are people who have no problem waiting for something, regardless of how long the wait might be.
It’s quite common for people to pursue certain career/educational paths because of their aptitudes. Ever since I was a kid I found math and science to be the two topics that interested me the most, as well as two topics I clicked with quite naturally, so it made sense for me to ultimately pursue an engineering degree.
I was also drawn to investing & finance because of my aptitude for analytical thinking and my knack for always questioning things, traits I feel synergize well with my math & science aptitudes. So it also came as no surprise to me when investing eventually caught my attention – it was only a matter of time.
Based on what I’ve observed over the years, almost everyone is interested in investing. By interested, I mean they are curious to learn more about investing and to see if they can successfully make money from it. Think of how almost everyone has some sort of interest in fitness – it’s safe to say that most people want to pursue fitness to live healthier lives.
Most popular endeavours attract a lot of attention: it’s not unheard of for gyms to be packed in the first few days of January as people tell themselves that their New Year’s Resolution is to start working out.
If you’ve ever observed this phenomenon, then you probably know what happens shortly after – most people go back to their usual sedentary lifestyles after the glamour of fitness wears off, and the reality of discipline starts to become clear.
The same thing happens in investing. Lots of people are interested at the start, but that interest slowly fades away for most people.
Now, there are several factors that contribute to people no longer wanting to pursue investing, but I believe that one of the major contributing factors is that their aptitudes never aligned with investing in the first place.
If someone is naturally impatient and doesn’t have any sort of inclination towards analytical thinking, then it should come as little surprise if they find soon themselves losing interest in investing after finding out what it really involves – patience and a lot of analysis.
Someone prone to emotional thinking may be disheartened to find out that investing is a daily act of resisting the urge to succumb to your emotions, even in the face of overwhelming odds. If a person is very emotional and has a hard time disciplining their emotions, then maybe they aren’t cut out for investing in the first place.
People who stick with investing for many years are usually those who have aptitudes and talents that align nicely with investing in the first place. You can’t convince someone to do something for long if it fundamentally goes against their natural “wiring”, but it’s easier to convince someone to continue if their interests and the skills/aptitudes needed to succeed in that interest align.
Effort is Still Required
Now, let’s look at the other side of the coin: nurture.
While people tend to pursue certain paths based on their natural inclinations, this is not to say that they achieved major success on talent alone. Chances are they also worked hard to achieve the results they wanted.
For example, NBA players no doubt got into the NBA because of their natural traits (height, athleticism, natural skill for basketball), but they still spend countless hours on the court improving their game. The late Lakers Superstar Kobe Bryant was famous for his relentless work ethic.
I mentioned earlier that I have an aptitude for math and science, but that doesn’t mean I never did any extra study. I enjoyed success in math and science throughout my life because I have put in countless hours behind the scenes to practice and understand the theory.
My aptitude helped, but I wouldn’t have gotten very far if I relied solely on my natural ability. I doubt my talent alone would’ve landed me a spot in, let alone graduate from, one of the top engineering schools in Canada.
If you’ve ever gone on to achieve success in any endeavour, no matter how big or small, then you probably know how frustrating it is when people attribute your success to your “natural talent”. People assume that you achieved success simply because you are naturally good at something, but they don’t see how many hours of blood, sweat, and tears you’ve put into mastering your craft.
Throughout my life, I’ve met many people who are very successful, and all of them achieved that success because they paired their talents with prodigious amounts of work. I’ve yet to meet someone who achieved massive success in any endeavour by relying solely on their natural abilities.
An investor can have all the right aptitudes and talents, which is a good start, but if they fail to improve and develop those natural abilities even further then they will soon find themselves trying to catch up with less talented investors who chose to put in the work to become better.
No doubt, Warren Buffett and other prominent investors enjoy success in investing because of their aptitudes, but I know for a fact that all of them have put in hundreds, if not thousands, of hours to improve their investing skills and knowledge.
Having certain aptitudes may give you an advantage over other investors, but over time this advantage will disappear if you neglect to constantly improve yourself through hard work and consistent practice.
Investing Requires Both Talent and Effort
So, based on what I’ve observed and experienced, investing requires a mix of both talent and hard work, but with a huge emphasis on hard work. Having certain dispositions may make investing a bit easier, but that doesn’t mean less effort is required.
I’ve previously discussed the importance of learning and study in the articles Holistic Investor Learning, The Stages of Investor Learning, and Studying Financial History. That is because investing is an endeavour which requires its participants to constantly become better.
Sure, an investor can be talented at analyzing a company’s financials or discerning whether an industry has bright prospects, but that doesn’t mean talent is immune from obsolescence.
The investing skills that work today may be insufficient in the future, so an investor must constantly work to keep their skills in the best shape possible.
Knowledge and continuous improvement is the name of the game in investing. People who refuse to acknowledge this reality and choose to rely solely on their talent will soon find themselves left behind by those who decided to improve and constantly strive to achieve new heights.
While investing does have a bias for those who work hard, that doesn’t mean hard work is all you need to succeed.
As mentioned earlier, there are some people who may not have the right aptitudes to succeed as an investor or may have certain traits that could hinder their progress.
For example, a person who is very bad at delaying gratification (i.e., someone who wants to be rewarded now rather than later) will definitely struggle as an investor – investing is all about putting money down now to get more in the future. Sure, they can work to try and become more patient, but if it’s deeply ingrained in them to receive instant gratification, then they’ve lost before they even started investing.
So, success as an investor requires a mix of both nature and nurture. Having certain aptitudes/traits, along with a willingness to work hard and become better, are the ingredients needed to help people achieve investing success.
Wrapping Up
The nature vs nurture debate is one of the oldest debates in existence, and there are no signs that this debate will come to an end any time soon.
There is no doubt that all of us have unique talents, and can therefore do some things better than other people. It is also no secret that hard work and effort play a major role in our lives, and that in most cases talent alone is not enough to achieve a satisfactory level of success.
Anyone who wishes to achieve a satisfactory level of success as an investor will need a combination of both aptitude and hard work.
This is because you can’t convince someone to pursue an endeavour if it fundamentally goes against who their natural “wiring”. Even if someone’s aptitudes align with investing, an investor must constantly put in the time and effort needed to continue expanding their knowledge and sharpening their skills.
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