Do You Want To Appear Smart Or Build Wealth?

It is not to say you can’t do both — appear smart and build wealth. However, as an investor, appearing smart to the outside world can often come at the detriment of your wealth.

Stig and I are re-reading Ray Dalio’s popular book Principles together and a quote I just read in it really stood out to me: “Don’t worry about looking good — worry about achieving your goals.”

In the context of his book, Dalio was generally talking about goals in your daily work or in business. However, I started to think of Dalio’s quote in the context of investing in stocks since I am also reading William Green’s book Richer, Wiser, Happier — particularly the chapter on Mohnish Pabrai. 

Green wrote, “Pabrai’s success both as an investor and a philanthropist is built entirely on smart ideas that he has borrowed from others.” Pabrai has openly admitted, “I’m a shameless copycat. Everything in my life is closed … I have no original ideas.” 

Pabrai believes humans have “something weird” wired in their DNA that makes it difficult for us to adopt other’s good ideas easily.

When I sit and ponder this concept, I can’t help but wonder if this is driven from our early days in traditional education when teachers drilled into many of us that “plagiarism is bad”.

Maybe it is more of a psychological phenomenon.

Studies have shown that humans prefer to appear to be something without actually being it, whether it is famous, rich, or skillful, than to actually be it and no one know. 

That’s right — more people would prefer to be perceived as something than to actually be that thing itself. 

Two ultra-successful business people, and investors, are teaching us the same idea, just using different words. Of course, they’re not the only ones with this same belief — Buffett is also a cloner himself.

Pabrai certainly has a higher level of fame than the average investor, but relatively speaking, Pabrai flies under the radar.

Pabrai doesn’t care about “looking good” to the outside world. He says, “the driver is to win the game. It’s exactly the same for Warren [Buffett], which is to show through the results that I did the best and I am the best because I played the game by the rules, fair and square, and I won.”

He didn’t try to get fancy or be overly complex with his investment strategy. Buffett had paved a path for decades with a strategy that was proven to work, all Pabrai had to do was clone it.

The problem for most people is that cloning someone else’s ideas rarely catches news headlines or any praise for being “smart”.

If you’re not innovative, the “first”, or doing something never been seen before, then you’re not “looking good” and most people aren’t interested in that. 

So what do people do? They deviate from the proven path. Believing the grass is greener on the other side, many people look for new ideas, often following what’s popular in the moment.

More often than not, over the long-term, this leads to subpar investing returns.

I challenge you to ask yourself, do you want to appear smart or build wealth? Do you want to look good or achieve your goals?

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