PEOPLE USING 4TH GRADE STRATEGY, {HINT- WARREN BUFFETT, ELON MUSK, ETC.} ARE MORE LIKLEY TO BECOME WEALTHY!
Disclaimer: Good Day, Readers. WealthBuildingPowers blog is a financial literacy/competency blog and does not provide specific investment recommendations.
A study finds that people who are good with numbers tend to have higher income and life satisfaction.
Research shows that education is linked to higher life satisfaction, but it is still unclear as to why. New research published in PLOS One found that higher numeric intelligence was associated with higher income level, which was then associated with more satisfaction with one’s life and income.
“Classic economic theory suggests that intelligence (‘reason’) produces better decisions, more wealth, and higher levels of ‘joy’ and life satisfaction. Conventional wisdom informs us that the opposite can be true – ‘ignorance is bliss.’ That is, being smart comes with a price, and that price is reduced life satisfaction,” explain study authors Pär Bjälkebring and Ellen Peters.
There is research to support both these theories of how intelligence relates to life satisfaction. Specifically, research suggests numeric intelligence (i.e., the ability to understand and use mathematical concepts) might be particularly important in relation to one’s life satisfaction.
“Numeric intelligence is potentially important because numbers instruct, inform, and give meaning to information intended to improve everyday judgments and choices, and those with greater numeracy generally understand more numeric information and make superior judgments and choices when numbers are involved,” reasoned the study authors.
Further, people who are highly numerate (i.e., high in numeric intelligence) tend to have higher incomes and are less likely to be unemployed long-term regardless of education and other cognitive abilities.Income is important for life satisfaction in that more income typically leads to more life satisfaction. However, it is important to note that people do not judge happiness on absolute income, but on relative income to others.
The researchers used data from surveys conducted by the Understanding America Study (UAS) housed at the University of Southern California (USC). Participation took place online. Data collection began in 2014 and complete data from up until April 26, 2018, were used for this analysis for a final sample of 5,525 U.S.-based adults.
Participants gave demographic information such as age, gender, education, and income level. They also completed measures of objective numeracy (i.e., numeric intelligence) and verbal intelligence. They also completed a Big-Five (e.g., Extraversion, Agreeableness, Conscientiousness, Neuroticism, and Openness) personality measure to assess their levels of each of these traits. Lastly, participants indicated how much they were satisfied with their income and how much they were satisfied with their life.
Results show that people who were more numerate had higher income, more education, and greater verbal intelligence. Numeracy was also related to greater income satisfaction and greater life satisfaction. The best indicators of income were education level, numeric intelligence, and verbal intelligence. These variables accounted for 25% of the variance in income while the Big-Five personality traits accounted for only 3.4%. To illustrate the impact of numeracy, the researchers note that the difference in income between those lowest and highest on the numeracy scale was around $36,000/year regardless of education, verbal intelligence, age, gender, or personality traits.
Further analysis showed that numeracy relates to both higher income satisfaction and higher life satisfaction via income level. Put other way, the results suggest that it is through having more income that numeracy can improve income and life satisfaction. More analysis showed that at lower income levels high numeracy was associated with lower income satisfaction and lower life satisfaction. Further, income level had little effect on satisfaction in those lower in numeracy.
“To sum up, our data suggest that objective numeracy had an indirect effect on life evaluations through income, and it moderated the relation of income for both satisfaction variables. These data support our supposition that those higher and lower in objective numeracy used income differently to evaluate their lives, irrespective of their level of education or verbal intelligence,” concluded the authors.
The researchers cite some limitations to this work including the correlational nature of these data, which makes it inappropriate to make any claims about whether numeracy causes changes income or in income/life satisfaction.
The study, “Money matters especially if you are good at math Numeracy, verbal intelligence, education, and income in satisfaction judgments“, was published on November 24, 2021.
Warren Buffett on the investing strategy ‘you can learn in the fourth grade,’ but is ‘not taught in schools
Warren Buffett has a trick for getting his money’s worth out of the stock market, and he says it’s a skill “you can learn in the fourth grade” — even though it’s “not taught in schools.”
At Berkshire Hathaway’s annual shareholders’ meeting on Saturday, Buffett recommended against obsessing over finding a perfect time to buy a stock. Rather, the Berkshire Hathaway CEO said, go ahead and invest, and then observe the stock market over time to see if you should buy more of that company’s stock or sell it.
Buffett said that he, longtime business partner Charlie Munger and other Berkshire Hathaway executives have long used this strategy because it has a higher chance of a return, and it alleviates some of the pressure of trying to predict the stock market. If the value of a stock dips after you buy it, Buffett noted, that means its shares have become less expensive — so buy more of them.
Buffett credited the navigation strategy to Berkshire Hathaway’s success: The company has a market cap of $704.29 billion as of Tuesday morning. By extension, the strategy would also then be responsible for Buffett’s status as a billionaire. The 91-year-old currently has a net worth of $115.2 billion, making him the world’s sixth-richest person, according to Forbes.
Another billionaire has followed a similar playbook: Tesla and SpaceX CEO Elon Musk, currently the wealthiest person. On Sunday, Musk tweeted familiar investing advice: “Buy stock in several companies that make products [and] services that you believe in. Only sell if you think their products [and] services are trending worse. Don’t panic when the market does.” This will serve you well in the long-term,” Musk added.
WARREN BUFFET USED THE ABOVE FOURTH-GRADE STRATEGY TO ACQUIRE APPLE STOCK SHARES
The below table demonstrates how Warren Buffett grew his Apple stake from $7.10 Billion to $120.4 Billion. “go ahead and invest, and then observe the stock market over time to see if you should buy more of that company’s stock or sell it.”
| END OF YEAR | APPLE SHARES HELD | PERCENTAGE OF APPLE SHARES OWNED BY BERKSHIRE HATHAWAY | COST BILLIONS | MARKET VALUE APPLE HELD BY BERKSHIRE HATHAWAY END OF YEAR |
| 2016 | 61,242,652 | 1.1 | $6,747 | $7,093 |
| 2017 | 166,703,209 | 3.3 | $20,961 | $28,213 |
| 2018 | 255,300,329 | 5.4 | $36,044 | $40,271 |
| 2019 | 250,666,566 | 5.7 | $35,287 | $73,667 |
| 2020 | 907,509,761 | 5.4 | $31,089 | $120,424 |
| 2021 | 907,559,761 | 5.6 | $$31,089 | $161,155 |
CONCLUSION – WARREN BUFFET’S FOURTH-GRADE INVESTING STRATEGY – SHAME IT’S NOT TAUGHT IN SCHOOL!
Warren Buffett is my best lifetime investment mentor and role model.
READ AND LISTEN TO MR. BUFFET TO GAIN YOUR FINANCIAL FREEDOM!
After almost 20 years of education, I expected more financial and investment literacy. I was disappointed. One of many great traits my parents taught me is that if you want something, get off your behind and work for it. Warren Buffett outlines a strategy a fourth grader can understand.
- Find a great company and research it. Confirm it is a company with good products and great leaders. Great companies increase sales!
- Buy some of this great company’s stock.
- Periodically reevaluate this company. If you still believe in this company and the price has fallen- buy more. Same if the price has gone up.
- Stop looking for the next great company when you have identified a great company. Keep buying the stock.
- When the next great company is spotted, start at step # one and repeat.
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LET’S MAKE SOME MONEY – CRYPTOCURRENCY IS ACCEPTED!
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St Jude Hospital: https://www.stjude.org/
Wounded Warrior Project: https://www.woundedwarriorproject.org
Folds of Honor: https://foldsofhonor.org
Wilson’s No-Kill Animal Shelter: https://wcnkas.org
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THE ONE BOOK YOU SHOULD READ…….
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FINANCIAL LITERACY IS JUST NOT THAT COMPLICATED – TRUST ME!
https://wealthbuildingpowers.com/2019/04/01/financial-literacy-is-just-not-that-complicated-trust-me/
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ABOUT ME
I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an NC. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
DISCLAIMER
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, and real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
Please seek your licensed CPA or fiduciary financial advisors for individual financial advice.
I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.
