You need this to be a billionaire

Do you have to be a genius to be a billionaire?

I certainly hope not.

But a recent research study by Jonathan Wai of Duke University suggests a strong link between brains and billions. The study explains  “the top 1% in wealth highly overlaps with the top 1% in brains.”

The study shows that 45% of billionaires are in the top 1% of cognitive ability.

Even more interesting was the study’s breakdown of brains and billionaires.

For example;

• billionaires are smarter than Fortune 500 CEOs
• billionaires that made their money from investments and technology are significantly more likely to have high IQs  than other billionaires
• billionaires that hit the jackpot in fashion, retail, or restaurants required less brainpower than most industries

My take is that while being very smart is crucial in some areas like creating new technologies, it can also get in the way of being focused and using common sense. For example, there are many wealthy people who made their fortunes using “street smarts” in the real estate business.

If I had to pick what characteristics were most important in becoming very wealthy, I would pick being opportunistic, patient, decisive, and contrarian.

Let’s look at a few examples.

John Templeton was a Rhodes scholar but it was his contrarian streak to scour the world for bargains ignored by everyone that put him in the investment hall of fame. The patience to hold on until markets recognized the value was a key part of this successful, common sense strategy.

Sam Zell also displayed street smarts in building a $4 billion real estate empire. Zell began buying deep value real estate in down markets in the 1960s and following this strategy over the next forty years yielded huge gains.

In 1990 when Argentina was going through a rough patch due to a currency crisis, a young Eduardo Elsztain had the guts to walk into the New York City offices of George Soros and talk him into investing $10 million in Argentine real estate.  With a little patience and some luck, Elsztain turned the $10 million into a fabulous $500 million Argentine real estate portfolio.  Investors who got joined him and Soros in their Dolphin Fund would have turned $100,000 into $1.9 million in a decade.  Mr. Elsztain is now the CEO of Cresud (Nasdaq: CRESY), a huge Argentine real estate company.

History seems to have turned full circle for Argentina. Currency controls imposed by President Cristina de Kirchner have frozen real estate markets.  And transactions have mostly been done in cash since the mortgage market collapsed in the 2002 Argentine financial crisis.

Obviously, this sort of investing is for risk capital only and you’ll need a little patience since value investing takes time to bear fruit.

You can call it courage, common sense, opportunistic or patience.

I call it smart investing.

Opportunity awaits,

Carl Delfeld.

Note from Midas Legacy Editor: We’re honored to have Carl Delfeld on our expert panel. Carl is founder of several financial organizations around the world, and he has advised the US senate and the US Treasury among many other large names. He is also the author of three investment books. Carl’s stock recommendation service, The Value Bounce, is the result of all his experience and research as he cherry-picks trades that allow you to have your cake and east it.