How to evaluate an investor

Supreme Industries, Cera Sanitaryware, Page Industries, HEG India, Thirumalai Chemicals, APL Apollo Tubes… We see/hear about them all the time. On Twitter, in blog posts and in conversations. Investors or Investment Managers talk of a stock they identified, a few months or years ago that has since several ‘X’d its initial price. When they explain their rationale for why they felt it was massively undervalued, it seems obvious, in hindsight. Let’s temporarily suspend cynicism and appreciate the investors’ skill in identifying multibagger stocks. Now how do you decide whether you should give them your money to manage or take their advice

Read more

Investing success: Rationality scores over Intelligence

We know that tests of conventional intelligence that measure Intelligence Quotient (IQ), are only a part of a measure of how well someone thinks. Yet, most societies focus on intelligence as predictors of successful decision-making. IQ, on it’s own, has been found wanting in explaining success or failure in environments that call for complex decision-making. A paper by Michael Mauboussin and Dave Callahan of Credit Suisse “IQ versus RQ” (link to paper provided at end of post) explores the role of rationality in investment decision-making and it’s impact on success or failure. Prof. Keith Stanovich, a professor of applied psychology at the University of

Read more