The Reason You’ll Never Be a Billionaire

InvestmentYou

By Nicholas Vardy “A genius is not born but is educated and trained… When a child is born healthy, it is a potential genius.”

– László Polgár, Hungarian educator and chess teacher
You may have heard of the “10,000-hour rule.”

Developed by psychologist Anders Ericsson – and popularized by Malcolm Gladwell in his national best-seller Outliers – it states that across all fields of human endeavor, it takes about 10,000 hours of “deliberate practice” to master a skill.

Deliberate practice requires well-defined, specific goals, a coach who can give you continuous feedback, and regular practice outside of your comfort zone.

Whether it’s learning to play the piano, winning a medal in the Olympics or developing into a world-class ballet dancer…

You must put in about 20 hours a week over a 10-year period to become a master at your craft.

That’s why musical prodigies, Olympic athletes and global soccer stars all start at an early age.

The conclusion is cheerfully egalitarian, if daunting.

As long as you put in your 10,000 hours of deliberate practice, you too can master any field you choose.

So what does this have to do (or not) with the world of investing?

Let me explain…
László Polgár’s Remarkable Experiment
Hungarian grandmaster Judit Polgár is a chess phenomenon.

One of the top female chess players of all time, she achieved the title of grandmaster at 15 years old.

In doing so, she broke the record of former world champion Bobby Fischer.

Like Mozart, Judit Polgár is a rare natural talent…

Or is she?

As it turns out, Judit and her two older sisters are the products of an unprecedented educational experiment carried out by their father, László Polgár.

The elder Polgár’s lifelong mission?

To test his conviction that he could turn any child into a prodigy.

As it turns out, Polgár succeeded in turning each of his daughters into chess grandmasters.

By all measures, his experiment was a remarkable success.

But as successful as László Polgár was…

He could not have turned each of his daughters into the next George Soros – fellow Hungarian, speculator and billionaire.

Here’s why…

[iu-adbox] My Journey Through 10,000 Hours
A few years ago, I tallied up the hours I had put into mastering the “craft of investing.”

Between my studies and my work as a portfolio manager, I tallied 10,000 hours quite easily.

Yet two things struck me…

First, the least useful part of my experience was the hours I spent as a mutual fund manager.

Too much of my time was frittered away with pointless meetings that had nothing to do with investing.

Next to none of the time I spent met the standard of Anders Ericsson’s deliberate practice.

Second, I learned that becoming a hotshot mutual fund manager had nothing to do with mastering the craft of investing.

For three years in the ’90s, I sat next to one of the top fund managers in the United Kingdom.

He was a high school dropout who had worked himself up the corporate ladder from a backroom job he took at the age of 16.

He dismissed my admittedly conventional and academic efforts to master the investment profession as “a bunch of bollocks” – a term that’s considered to be …read more

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