Are Wealthy Investors Always The Most Intelligent Investors?

Pretty heavy question here, but one that needs to be asked…Are wealthy or rich investors always the smartest or most intelligent investors? With the likes of Bernie Madoff these days who have wrecked lives, it would be hard to quickly answer YES.

Sure it depends on what we are talking about here. I mean you also have to wonder how Madoff got away with so much for so long – clearly he was “smart” enough to allude the SEC for years during the Ponzi Scheme.

What I’m taking about here is strictly regarding the investments they make…

Does Money Buy Information?

To me being wealthy means having access to information that other, non-wealthy, investors wouldn’t get. Is this the ultimate source of investment growth and performance? If you have a deep understanding and knowledge of a company or industry, don’t you have an edge over other market participants?

Take Warren Buffett and Jay-Z for example – yes I said Jay-Z! The two recently sat down together at the Forbes 400 meeting last year. Whether you know it or not, Jay-Z is a wildly successful businessman.

Both of these guys have access to a lot of information. Does this make them intelligent or just privileged? Add your comments below with your opinion.

Either way I think it’s great that you can bring together these two and it just drives home that fact that wealthy investors can come from very different backgrounds yet achieve relative success.

SEC Accredited Investors

Now there is a classification on whether you are “smart” enough to invest on a higher level. According to the SEC, only rich or wealthy people should be considered intelligent enough to either understand complex private investments or to hire someone that is competent to explain it to them.

I’d beg to differ that a lot of readers here are extremely smart and understand much more than someone else who meets the accredited investor guidelines.

Do The Rich Get Richer?

I say yes of course they do. But that doesn’t mean that you or I can’t get to that level. Being an accredited investor does have it’s perks, namely to invest in private companies like Facebook and Twitter.

Shares of just these two social media giants have been trading on for a while now. And you can rest assured that those wealthy investors who own shares during any IPO’s are going to make millions and millions overnight.

I’m Leaving This Open To Debate

I have my own opinions but I’d like to hear yours. Do you think that wealthy or rich investors are intelligent? Add your comments via Facebook below.

About The Author

Kirk Du Plessis

Kirk founded Option Alpha in early 2007 and currently serves as the Head Trader. In 2018, Option Alpha hit the Inc. 500 list at #215 as one of the fastest growing private companies in the US. Formerly an Investment Banker in the Mergers and Acquisitions Group for Deutsche Bank in New York and REIT Analyst for BB&T Capital Markets in Washington D.C., he's a Full-time Options Trader and Real Estate Investor. He's been interviewed on dozens of investing websites/podcasts and he's been seen in Barron’s Magazine, SmartMoney, and various other financial publications. Kirk currently lives in Pennsylvania (USA) with his beautiful wife and three children.