Yes, I’m still an InvestorGeek! It might seem like only Jason and Christian are blogging lately, but I don’t mind being the guest that drops in once in a while. I’m sure many of you have watched or heard of the new Mark Burnett-produced game show called “Are You Smarter Than A 5th Grader“. If not, you can read a quick description here.

I was inspired after reading Canadian blogger, Tony Hung’s short diatribe on who’s really smarter – the kids or the adults? Tony, if you don’t know, is an editor at the prominent new media site, BlogHerald. I’ve had the privilege to meet him, and trust me, he’s one smart dude! But I digressed since the question remains, who ARE the smart ones? What does it mean to be smart? Is it just about random trivia or knowledge? After all, adults were able to create a show like that to make money! Aha…. now that money comes into play, that’s my lame segway to discussing financial smarts!

So, What Makes You Smart?
Sure, trivial knowledge can sometimes make you a millionaire… rarely. Ken Jennings was $2.52 million richer after inspiring the millions of the easy money / instant gratification generation with 74 consecutive wins on the ‘Jeopardy!’ game show. But is that what being smart is all about? Is the proficiency at regurgitating facts and information enough to call someone smart? I’ve previously written on Investorial that being successful in financial matters is not predicated on whether or not you have the knowledge. But it absolutely matters to be financially smart! What do I mean?

I humbly define “Smarts” to be a keen sense of awareness; and not just an awareness of facts. Alongside knowledge must come awareness of self, and a highly developed thought processes influenced by many factors – your life experience, your parents (a gimmick that Robert Kiyosaki exploited very well), your cultural influences and even your moral belief system.

Perhaps because of my Chinese ethnicity and the stereotypes attributed to me, I often rebel at the thought that you go to school for knowledge. It’s not that I don’t like those compliments of being a genius or math wiz, but going to school is not about learning 1 + 1 = 2! True awareness is achieved when you have a process in place that tells you how to find the answer should you not know what 1 + 1 equals. Whether it’s leveraging someone else’s know-how, or knowing how to look up the answer. Knowing the answer qualifies as knowledgeable, knowing how to achieve the same result without knowing the answer is displaying smarts and ingenuity! Truthfully, there are some “slackers” I admire more than geniuses. They are not working hard, but they are working smart!

Nobody is going to learn everything they need from textbooks. In fact, most people have not been thought how to manage their finances through any form of formal training. But even if you obtain knowledge, will it truly help? Knowledge that smoking causes cancer doesn’t deter smokers from taking a puff, so why would knowledge help a spendrift become frugal? How is it that someone is labeled “cheap”? Why do people have gambling problems? Why are some people so afraid of the stock market when people keeping telling them how to manage risk? These are personality traits deep rooted in your financial biography. There are certainly ways to overcome tendencies, but its usually through an epiphany, an awareness, a self-realization, rather than the consequence of gaining knowledge.

How Financially Smart Is A 5th Grader?
Does a 5th grader need to bother with finances? Even if they are taught the knowledge, they will lose it during their growth into adulthood. They might remember for one or two years, but it will be a vague memory when they truly need those information. The cramming /memorizing of knowledge is not learning! There is nothing at stake for the kids. They won’t be able to apply those strategies in their life. Those strategies are not being self-actualized into their being because there’s no application or relevancy to do so. Most kids cannot relate when you scold them about wasting money. Again, knowledge does not equate to smarts because the awareness was never achieved.

If that’s the excuse of a 5th grader, what’s the excuse for an adult who keeps falling into debt and having to declare bankruptcies throughout their life? If you’ve got a friend that falls into that category, I’m sure he/she has been told many times the different ways to get out of debt. Maybe he/she even called Suze Orman and got a tongue lashing from her about the subject too. So much knowledge is imparted but it doesn’t mean a thing if it doesn’t integrate with your thought processes. Contrast that to someone who is not knowledgeable, never got advice from any sources but simply has the will to stop splurging on meaningless items. Does being financially smart resonate with being critical to your financial life yet?

The next time you watch the game show. Give the contestants a break! Kids and adults can both be knowledgeable and/or smart in their own way. The truly smart thing to do is not to compare and work on yourself!

Next Time: Business / Career Smarts
If we are discussing your financial smarts, invariably we will need to touch on business / career smarts. Your finance is derivative of your income, which is sourced from your business / career, right? At least if you weren’t born with a silver spoon, there will be a phase in your life where this is relevant. I will actually leave this topic for a future blog post, so watch for it!

Comments (12)

“Knowing the answer qualifies as knowledgeable, knowing how to achieve the same result without knowing the answer is displaying smarts and ingenuity!”

That is too much of a generalisation – if I ask someone a question and they have to look up the answer, I tend to think they are either:
a) out of their depth; or
b) an idiot.

“Knowing the answer qualifies as knowledgeable, knowing how to achieve the same result without knowing the answer is displaying smarts and ingenuity!”

Based on this I would much rather ‘display smarts’ than be knowledgeable. No one person can know everything; it would be nice to see more people that were smart enough to look up what they did not know. The key is what they do with the knowledge they obtain. The old cliche’: Knowledge is power is in fact a lie. It is the implementation of knowledge that is power.

What you have just said is that given the option of knowledge or no knowledge, you would rather have no knowledge.

Everyone knows how to look something up – it’s called books, or google, or journal articles. It isn’t exactly brain surgery.

Making excuses for laziness is bad for personal development, and bad for business. Learn the answer now, before you need to look it up.

Someone who has no knowledge:
a) does not know how to place knowledge they just learnt in context;
b) will have difficultly understanding nuances and exceptions to the rules;
c) will waste (clients’) time; and
d) will either freeze when faced with important decisions or will simply guess the answer. (i.e. “What do you mean I don’t have 3 hours to find the answer?!?”)

If I go to a painter and ask him to paint my house, and he needs to look up how to use a brush, I don’t think he has “smarts”, I think “time to find another painter”.

If I go to a doctor to have surgery performed and he needs to look up how to use a scalpel, I am going to a different doctor.

The only situation I could justify not knowing the answer is where that knowledge is obscure, or voluminous.

I work as an attorney and while I am “knowledgeable” about the field I specialise in, if someone asked me about maritime law, I would not know the answer. I could display “smarts” and “ingenuity” in finding the answer, but I wouldn’t consider that a virtue. Instead, I would recommend they go and talk to someone who is “knowledgeable” about maritime law.

It isn’t hard to be knowledgeable about a subject – dedicate yourself to the task and undertake the necessary education. Pretending that ignorance is someone “smarts” or “ingenuity” is ridiculous.

Here is an example of how knowledge pays off (I wish I was one of these attorneys):

“As you develop your expertise you become more valuable to a client,” Finn said. “It justifies higher rates.”

Choate’s list of its strongest practices includes private equity, technology, intellectual property litigation, insurance and reinsurance and large commercial litigation.

“Our strategy is to focus on a select number of core areas where we think we’re very good,” said Choate co-managing partner William P. Gelnaw Jr. “Firms of all sizes can do well if they’re focused and talented.”


You are putting words in my mouth when you indicate I prefer no knowledge vs. knowledge. I’d resubmit that I prefer a person who display smarts to achieve permanency in all solutions, all variety of the same type of problem over a knowledgeable person who cannot evolve his thinking to handle similar situations.

Your example of asking a painter is ridiculous. I already defined knowledge as “awareness”. I surmise that when you label a person a “painter” that the awareness is implicit. It’s the same implicit assumption that a Harvard / Standford / MIT grad who has never picked up a paintbrush in his life to NOT have an awareness of painting. In that case, no matter how much knowledge that person has, the lack of awareness about painting should cause you to reconsider hiring this person.

Now, if this knowledgeable genius can adapt and learn by watching others, though he doesn’t have the knowledge, and nobody is teaching him, perhaps his awareness reaches other realms (i.e. physical dexterity). Then you might still be asking a successful candidate to paint your house. But if his awareness is only limited to textbook konwledge and his brain wiring renders him a “clutz”. I don’t think you’d be served to ask him to join your painting party at all.

Smart and Knowledgeable are not mutually exclusive. You seem to think I think so and. Though a smart person may not always have those paper credentials to back them up, they are often the ones with the drive to keep developing personally, out of necessity because of their predicament. Thus called “the school of hard knocks”. Whereas once knowledgeable people obtain their knowledge, can sometimes restrict themselves to their narrow view of the world, unwilling to expand their awareness.

My assertion is definitely that if smart is a set defining usefullness to mankind, then knowledge is a subset of smart. They are not mutually exclusive, but smarts means more than just knowledge!

a few corrections in my last email lest people respond ….

“I already define SMARTS as awareness”… not knowledge, that was quick-typing

And think of this issue, anybody in business as a painter has the basic knowledge / awareness of a painter inmplied.. and I’ll define painter here as a person who paints houses, not an artist. What if you need to hire a painter the paint the Eiffel Tower? I don’t know why you would, but it’s possible that no painter you interview has ever perform such a task before? Knowledge wouldn’t be a deciding factor in your choice, but the a painter with the smarts will be the successful candidate.

There are many lawyers out there, as I believe knowledge is only a subset of smarts.. those knowledgeable lawyers you speak of are admirable and its a quality they can sell to get clients, but ultimately, a knowledgeable lawyer who knows all about precedences but with no smarts won’t be as successful as a knowledgeable lawyer who has the smarts to apply it in cases to CREATE precedences. Which one do you think you want in a case that has never been tried before?

Interesting topic, but I think one should look at Scientific America or Discover regarding this topic.

Last year in August 2006 Scientific America ran an article entitled “The Expert Mind”.

The article is well worth the read and gives you some interesting insights into what makes you “smart” or an expert.

Here is the kicker of the article:

“The one thing that all expertise theorists agree on is that it takes enormous effort to build these structures in the mind. Simon coined a psychological law of his own, the 10-year rule, which states that it takes approximately a decade of heavy labor to master any field. Even child prodigies, such as Gauss in mathematics, Mozart in music and Bobby Fischer in chess, must have made an equivalent effort, perhaps by starting earlier and working harder than others. ”

Think about this paragraph a bit. It means to be “smart” regardless of how you have been blessed genetically you need time. A genius does not fall from the sky.

Regarding the point, “Knowing the answer qualifies as knowledgeable, knowing how to achieve the same result without knowing the answer is displaying smarts and ingenuity!”

I think the first point you are talking about trivia, and the second point is called problem solving. Being smart is about how much of each you have. Some fields require more trivia, and other fields require more problem solving. For example in university I had friends in biology that became doctors and they were trivia folks. Whereas I am an engineer and I am a problem solver buff.

As per the Scientific America article trivia and problem solving can learned. For example engineers are heavily weighted towards problem solving and not much trivia. Engineers are required by their nature to create bridges through mountains. People don’t ask can it be done. They say let’s do it and the engineer has to figure it out.

Whereas a doctor when inspecting a patient has to remember the thousands of symptoms and make an analysis. This sort of smart is more trivia related.

To become successful you need to perserve, and work at the topic. Depending on your ability to learn that sucess might come quicker or slower, though according to Scientific America it will come. Otherwise our race would have died out a LONG time ago.

My painter example was, admitedly, far fetched, but I was attempting to show that, taken to extremes, the theory breaks down.

Problem solving is fine where there is no routine answer. However, if you need to problem solve a solution when you should already know the answer, then I would not classify that as smarts.

Phil: Hmmm I have to disagree with the following point:

“Problem solving is fine where there is no routine answer. However, if you need to problem solve a solution when you should already know the answer, then I would not classify that as smarts.”

Let me give an example my wife. She is an electrical engineer, whereas I am a mechanical engineer. Her trivia knowledge is downright horrible, but her problem solving skills are very good.

Knowing by trivia is not better than knowing by problem solving. Let’s take the following algebra:

x2 – 1 = 0

The answer is

(x+1)(x-1) = 0 and thus x = 1, and -1.

I know this by trivia, as it is childs play, as the properties of the right angle triangle 3, 4, 5. For my wife to get the answer she needs to problem solve.

Sure I might be slightly faster, but am I better? No, because most problems in life are problem solving solutions, and applying trivia answer can result in disasterous results. I even argue that many problems that we have had is BECAUSE we relied on trivia since trivia assumes equality.

So is it better to know by trivia, or problem solving? I say neither…

Phil, I want to back off a bit since I think I am coming on a little rough.

Let me explain the context. When I was studying engineering we were a close knit group that hung out with each for five years. (I studied at University of Waterloo) And one of the discussions that reared its head was photo memory vs problem solvers.

It related to how we learned materials. For the most part people argued that education was geared towards those that were good at photographic memory. My good friend who later became a lawyer in patent law said because education was mostly trivia related he could pass engineering courses even though he could not problem solve his way out of a wet paper bag.

Of course problem solvers still passed and did well, but many who had photo-graphic memories or were good at trivia thought they should not pass engineering.

Agreed – a photographic memory is no good if you can’t problem solve.

My own point of view stems from not having a brilliant memory, but good problem solving skills. I am constantly fighting to make sure I know enough, and sometimes feel swamped with information.

I can see aspects of my job where I need to look up the answer, and think “I should know this already”. Most of it is biology, but given the option between not knowing it and knowing it, I would choose knowing it. 😀

I think I came across strongly above as well – mostly because I very much value the knowledge that is building up slowly.

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