1. Intelligence increases the ability to fool yourself with elaborate stories about why something happened.
Average people can often learn faster than the superintelligent, because the superintelligent try to cram the real world into the theories they’ve been taught, while average folks are better at accepting the real world at face value.
Here’s the thing: We judge others based solely on their actions, but when judging ourselves we have an internal dialogue that justifies our mistakes and bad decisions.
If you’re a fund manager who earned terrible returns, I may be able to instantly point out what went wrong: Buying during a bubble, selling during a panic, not enough diversification, whatever.
But if I’m a fund manager who earns terrible returns, I can tell myself a story justifying my decisions and explaining the outcome. “The Fed distorted the economy” I might say, or “Look at my model. It’s the market that’s wrong!”
Two things come from this.
One, we think of ourselves as less flawed than other people, because we rarely hear the internal justifications other people have for their mistakes, but we’re keenly aware of our own.
Two, the smarter and more creative we are, the more elaborate stories we can tell ourselves to justify our poor decisions.
A normal person could never predict 19 of the last two bear markets and still consider themselves a market oracle. You need an advanced degree and an Excel model with 100 tabs to justify that kind of mental gymnastics. A normal person isn’t capable of leveraging their portfolio 100-to-1, losing everything when the market sneezes, and blaming it on a 25-sigma event. You need a PhD in physics to convince yourself of that.
When you’re blessed with intelligence you’re also cursed with the ability to use it to concoct intricate – and often false – stories about why things happened. Especially stories justifying why you, Mr. Smartypants, made a mistake.
More here – Collaborative Fund