Do Warren Buffett and Charlie Munger agree to the statement that great investors are made, not born? What things would they recommend someone to do to if they want to become a great investor? And what mental attributes do you think a person should have if they want to try to become a great investor?

Warren Buffett answered as follows.

On personal traits

I largely agree with the statement. I would say that I don't know to what extent an ability to detach yourself to the crowd is innate or to what extent that's learned. But that's a quality you need. I would agree totally that a great IQ is not needed. You do not need to be terrifically smart to do well as an investor at all.

On education and what to learn

I would say that what I learned from Graham at first and then from Phil Phisher later, and then from Charlie was important. And the proof is in my record actually. From 11 to 19 I was reading Garfield Drew and Edwards and McGee, and all kinds, every book there was on investments. And I didn't do well at all. And I had no real investment philosophy. I had a lot of things I tried. I was having a lot of fun, but I wasn't making any money. And then I read Ben Graham's book in 1949 when I was at the University of Nebraska. That actually changed my whole view of investing. And it really told me to think about a stock as a piece of a business. Now that seems so obvious you can say that why should you regard that as the Rosetta Stone? But it is the Rosetta Stone in a sense. Once you crank into your mental apparatus that you're not looking at things that wiggle up and down on charts, and people send you tips on that you should buy this because it's going up next week, or it's going to split, or dividends are going to increase or whatever. But instead you're buying a business. You've now set a foundation for going on and thinking rationally about investing.

Traits that may be innate, or may be learned

There's no reason why you need a high IQ to do that. There's no reason why you have to be born in some way. I do think there's certain matters of temperament. They may be innate, and they may be learned. And they intensified by experiences you go on to partially innate but then reinforced in various ways by your experience as you go through life. But that's enormously important. You have to be realistic. You have to just define your circle of competence accurately. You have to know what you don't know, and not get enticed by it. You have to have an interest in money I think if you're very greedy it'll be a disaster because that will overcome rationality.

Old knowledge is still valid today - know the basic principles of investing

I think the books I read were important, and they really molded how I thought about businesses and investing. I think they're just as valid now. I haven't seen anything in the last 25 years and I glance through most of the books. I've seen nothing to improve on Graham and Fisher in terms of the basic approach of going about investing, which is to think about stocks as businesses, and then think about what makes a good business. And really that's all there is to investing, and having a margin of safety which Ben talks about.

On detaching yourself from the crowd and think for yourself

It's not a complicated process but it definitely requires discipline. It requires insulating yourself from popular opinion. You just simply cannot pay any attention to it. It doesn't mean anything. The idea of listening to lots of people tell you things and that it's just a waste of time, and you'd be better off just sitting and thinking a little bit. I mean there were no analyst reports on custom frame makers. And they wouldn't have been any good anyway. You just have to think. But you have to think about them in terms of their business characteristics and what they can earn on the capital employed, and that sort of thing.

What to read

I would just read the Graham and the Phil Fisher books, and then read lots of annual reports, think about businesses and try and think about which businesses you understand and which you don't understand. And you don't have to understand them all. Just forget about the ones that you don't understand. 

Charlie Munger's comment on continuous learning

At a deeper level of generality, if you have a passionate interest in knowing why things are happening, you are always trying to figure out the world in terms of why is this happening, or why is this not happening... that cast of mind kept over long periods and gradually improves your ability to cope with reality. And if you don't have that cast of mind I think you're probably destined for failure even if you've got a pretty high IQ.

Warren Buffett on high IQ and looking at what doesn't work

Yeah I would say we've seen relatively little correlation between investment results in IQ. I mean, not that there are a whole bunch of people out there with 80 IQs that are knocking the cover off the ball, but there all all kinds of people with high IQs that get no place. And it's probably in a sense it's more interesting to look at why people with high IQs don't succeed, and then sort of cast out those factors. See if you can cast them out in yourself and leave a residual that will work.

Because like Charlie says: All I want to know is where I'm going to die, so I'll never go there. If you study the people who die financially, with high IQs, and say why do they die? You'll see certain overwhelming characteristics that are present in most of the cases. And you just got to make sure that either you don't possess them, or if you do possess them, you can get rid of them or control them in some matter.

If you're keen on starting investing already, with a smaller sum, how would Buffett do it? Read about it in our next article here!