Why a High IQ
Won’t Make You Rich
“Copying the Habits of the Wealthy is a Big Mistake”
What is the secret to making a lot of money? According to Nicholas Taleb, Distinguished Professor of Risk Engineering at New York University, the answer is simple, take lots of small, inexpensive risks with the chance of a big payoff. This gives you the best odds of success in the shortest possible time.
Mr. Taleb demonstrates how a person with the world’s highest IQ cannot outperform an average person tinkering (using trial and error), he proves this mathematically. This makes sense because no matter how smart you are, you cannot predict the future. However, a person of average intelligence can take lots of small risks, then pick the winner. The best idea is revealed by tinkering. The Tinkering Method gives you a mechanism to expose luck.
A Simple Way to Measure the Effects of Luck
Cornell economist Robert Frank has studied luck with simulations. He shows if you introduce only 2% of luck into a tournament with 1,000 participants, the most highly skilled person will now only have a 26% chance of coming out on top. If there are 100,000 participants, the most talented person now has only a 6% chance of winning! Think about that, with only 2% luck; there is a 94% chance that an average untalented participant will come out as the winner. Without luck, the most skilled person would win almost every single time.
The Real Reason for Success is Tinkering
This simple story will help you to understand the mechanics of tinkering. A woman opens a flower stall. She just about makes a profit. One day while buying flowers for her stall, she notices some nice flower pots, so she buys a few pots to sell along with her flowers. Then something remarkable happens, the flower pots sell out right away, faster than the flowers. So she buys some more pots and this time in a variety of colors. They also sell out quickly, and before she knows it, she is in the flower pot business, selling flowers on the side.
Now let’s ask ourselves, “Was this woman in control of her success?” She bought some pots to go along with the flowers, but she had no idea the pots would outsell the flowers. By tinkering, she found a winner.
Remember, taking a lot of moderate risks with the chance of winning big is much better than taking one significant risk.
Small Risks with the Chance of Big Rewards
You cannot know the exact nature of life due to its complexity, so rather than trying to solve the puzzle (virtually impossible), you tinker with multiple ideas and investments while spending the least possible amount. Understanding the ratio of risk and reward is more critical than directed knowledge because you’re able to maximize your opportunities.
Trial and Error
A person who has no idea of where he is going, but has many possibilities of big payoffs, will almost always beat an intelligent person who knows where he is going but doesn’t have multiple chances of large rewards. This translates into trial and error works in a random world. Trial and error with the chance of making big money is more important than observation and judgment. Why, because you don’t know what’s going to happen in a random world. Trial and error allow you to benefit from randomness because real life gives you the answers rather than guessing. Knowledge is useless in a chaotic world.
How to Make Money Fast
You need to invest in lots of small projects and fail quickly and cheaply. You lose, lose, lose, but once in a while, you make a lot, a serious amount of money. You receive feedback, valuable information that is almost impossible to work out by philosophizing. The feedback allows you to minimize your mistakes and choose the correct path.
Tinkerer’s gain from disorder, and the unpredictability of the world. They understand that they can’t work it all out, so they use randomness to increase their chances of spectacular success. Trial and error work exceptionally well in the presence of chaos.
Compare that to smart, educated people who invest heavily in one idea. They spend a lot of money over time, with little chance of success. Look at a list of the Richest 500 families in the USA in 1983 and compare it to the list in 2013, only 10% of them are still in the top 500. This proves that wealth is continually shifting. Weren’t those rich people in 1983 smart? Didn’t they have the best financial advisors? If all these wealthy people were so intelligent, why couldn’t they hold onto their money?
Look at these facts about how wealth changes in the USA;
To have this much movement in wealth some people at the top have to go down, i.e., they lose money.
How to Make Money Online
Could you have predicted Facebook, Amazon, or Google? I doubt it. That’s precisely the point; it’s impossible to predict these extraordinary types of successes.
Successful people aren’t geniuses. They just “Stumbled Upon” their success. Most of them don’t even know they’re lucky. Luck is a much more critical success factor than intelligence. All of the most significant scientific discoveries came about due to tinkering.
Self-Help Books and Seminars Can’t Help You
Most self-help books are based on common denominators. The authors search for habits among the self-made millionaires and billionaires, then proceed to tell you to apply those same qualities to your life for “Guaranteed Success.”
Copying the habits of the rich is a mistake. Millions of us try, but what happens most of the time? We don’t succeed. We are determined, organized, creative, work hard, get up early, and take risks, etc. When we aren’t successful, we assume we must have done something wrong, so we read more self-help books and pay for expensive seminars and try again. We blame ourselves, not realizing that’s it’s our method that is faulty, not us.
So what’s the best plan for making a ton of money and being hailed as a genius?
How to Get Rich Quickly
The fastest way to get rich is The Tinkering Method. Without realizing it, that’s how successful people have made their money. Now I hear you say, “But successful people come up with ideas and work hard.” Well yes, sometimes they work hard, but they are never in control of their future. They had to be, “In it to win it,” but like the flower pot lady above, they “Chanced” upon the winning formula.
Most of the time, these lucky individuals won’t admit they were lucky because it takes away from their success. They want you to believe how talented they are. They also like the idea of you thinking they have the “Secret of Success.” They might even write a book or two on how they achieved their astonishing success. The book usually starts with how poor they were until they came up with their brilliant idea. You get the picture.
The Silent Evidence
You rarely hear about the failures in life. They are the “Silent Evidence.” We only see the winners, precisely because they are visible. The winners are talked about, written about, and admired. To understand the secret behind their success, we must first look at the failures. Many of the failures are just as intelligent (sometimes even smarter) as the rich, and work just as hard, but they didn’t “happen upon” the right idea.
Success is based entirely on luck. The wealthiest people are nothing more than lucky participants; their success is just an accident of fate. Now you know the secret to uncovering luck and becoming one of them.
The Mystery is Solved
This hidden knowledge is free, no expensive monthly fees or 5-day seminars. The solution to making big money is to make lots of small, low-cost investments with the chance of a big payoff.
The Tinkering Method was written by Ashram Beam.
Ashram Beam is the pen name of a writer who lives in Holland Park, London, England.
This content was originally published here.