We have already beaten it into everyone’s heads. The only way to get *wealthy* is to start a Company. The only way to become well off is to go into Silicon Valley, Sales or Wall Street. The rest is non-sense. No performance, no money, no exceptions. With that horse beaten to death, lets see what you’re good at and determine which industry you should work in.
1) Why You Need to Determine Your Intelligence Set Early
2) Intent – The Broadest Talent
3) Numerics – The Most Difficult to Replicate
4) Synthesis – The Most Adaptable
5) Artistic – The Call Option
1) Why You Need to Determine Your Intelligence Set Early
You simply do not have time. We tried to explain this in our post on living a balanced life but it needs to be a non-debate. You do not have time.
We hope that the vast majority of our readers are young because we can prevent them from ruining their lives chasing skirts at the expense of their future. You are going to get more physically attractive from 20 to 35 if you eat healthy and stay in the gym. However… It will become exponentially difficult to learn new skills as you age that are **equivalent to your competition**.
We highlighted part of that sentence with 4 stars because it is paramount to understanding that you do not have time. Lets assume that you believe you can learn a new skill at 20 just as fast at 30… Great.
It doesn’t matter! Too Late!
Why doesn’t it matter? It doesn’t matter because everyone starts from *zero*. If person A is equally as smart as you but starts building his salesmanship skills at age 20 and you start at age 30… Good Luck! While you may improve at the same rate as the 20 year old, you won’t be as good as him until you are 40, you’re cooked.
Now that we have spooked everyone… even if you’ve made some bad decisions… there is nothing you can do but fix it (take action). If you’re 18 (hopefully) or if you’re 30 (long-road ahead) the only way you’re going to get better is to find your primary intelligence and leverage it immediately. Get into the ring and get ready to take all of those losses.
2) Intent – The Broadest Talent
Some of you are going to read this section and believe it means “Emotional IQ”. That is certainly close. The difference between intent and Emotional IQ is that you don’t need control of your own emotions to have an amazing ability to recognize intent. Intent is an all encompassing skill that is fully transferable to every aspect of your life (except one): Business, Sales, Social Environments.
The elephant in the room? Minimal transfer skills to Silicon Valley/Quantitative Finance.
Do you ever wonder why Quants and Engineers are usually the two groups with the worst social skills? Do you ever wonder why they are so brilliant… yet… have a hard time in group environments? Well now you know. They have low abilities to read intent.
The good news is that intent is the easiest skill to learn. You can go from zero skills to moderate abilities in a year (maximum). The trick? If you recognize that your talents do not lie here, don’t bother going into a pure sales role! You’re going to be better off in a specialized business, Silicon Valley or Wall Street (Remove Investment Banking and Sales within Wall Street).
With the basics out of the way. here’s a good bullet point checklist to see if you’re good at recognizing intent:
1) Can you correctly read the difference between passive aggressive behavior and dis-interest?
2) If you are shown an advertisement can you determine if it is “good” without seeing the numbers?
3) Can you correctly read the difference between insecurity and an outright lie?
4) Are you able to tell when someone is lying about their achievements (up or down)?
5) When an acquaintance of yours says he/she is going to do X do you know with certainty that he/she will or will not do it?
Now that you’ve read these five questions you can now test yourself. You can use this as a quick quiz over the next 6 months and see if you have a *talent* for intent. Find at least 10 situations where you will have to ask *each* question to yourself and you need to try and get 50/50 correct. This is next to impossible. Try it anyway.
If you are able to correctly recognize these behaviors 50-60% of the time (you’re at the median). IF you can correctly recognize these behaviors 70-80% of the time (you’re at the 1.5 standard deviation). If you clear 85%… You’re extremely talented. If you’re at 50% or below, ignore it as a primary talent, if you’re at 70%+… Get ready to invest aggressively in your salesmanship.
For fun, lets go ahead and assume that you’re good at this. You are able to correctly determine the *intent* behind what someone is doing 70% of the time. Congratulations! Now you can move on to building up your encyclopedia of reference points.
1) The best way to determine if someone is being passive aggressive with you… or is dis-interested in you… is to give them something they need. We would wager that everyone meets at least 5-10 of these people per day and don’t recognize it.
Once you’ve got your list of people, you can see if you were correct. Give them an item worth about $20 that they *need* and see how they react. If they feel uncomfortable? They had no interest in you. They were not being passive aggressive. If they are extremely excited (fake) or they don’t even say thank you (blunt) they are being passive aggressive. It really is that simple gentlemen.
If you don’t want to spend anything and want to do it the long way, here’s another method:
For the most part, when people give you short answers (assuming they are not meaningful) they don’t care about you. If they try to gossip with you… You’re likely talking to a passive aggressive person (hence why the vast majority of women gossip and are usually passive aggressive).
2) We put up a tweet of a fantastic advertisement we saw on Yahoo! It was for a skin care product with a “free trial” <– affiliate 101. It was so good you can view the advertisement below.
This one was an easy one to peg as “good” because of the advertisement copy: 1) *horrifies surgeons* (ie: fake bias of positivity), 2) *shocking trick* (IE: laced with emotion), 3) *weird solution* (IE: targeted at morons looking for a magic cream), 4) *younger* (IE: solution to the problem, clearly targeted at women 25-40 or so).
After clicking on the headline copy you enter the sales page. The sales page is also beyond fantastic. The details in the woman’s face are extremely close to looking “real”. That’s what a good sales page should look like. Looking down you find the following: 1) “botox injections” (Ie: pre-selling the product at a higher price point since botox is relatively expensive – cost of most generic skin products is below $1.00!); 2) “recent clinical study” (IE: again, biasing the reader into believing in positive results), 3) “contraction of facial muscles” (IE: how morons would understand how skin ages – making a connection by talking in this form of prose), 4) “free trial” (IE: set them up for recurring billing).
That is how it is done! If you can correctly see solid ads, you’re going to be swimming in money later… by writing them! This ad is simply fantastic. It is targeted at an extremely lucrative market as well.
Insecurity (decline of looks) + Income (women 25+ or married with access to hubby’s $) = Cash Flow Machine
***Pro-tip: As you can see… all good businesses target insecurity & fear. A great example is “Investment Banking Modeling Courses!” anyone who works in the industry knows that these courses are useless (you are trained on the job). But. Everyone wants an “edge” on their competition! In *fear* of not being able to perform up to standards, they sign up for modeling courses that won’t help them at all. They could have just learned how to model *for free* sitting at their desk. But… That’s too much work. Everyone wants “hand holding”, making them less self-reliant and weaker performers in general… Sigh.***
3) If someone is insecure and you need to befriend them… You know what to do. Highlight the insecurity as a positive. The person is so insecure about topic X that you should simply big him or her up on topic X. Lets say your acquaintance has a lot of contacts that you want to sell your product to. Unfortunately, he is an extreme liar when it comes to getting girls (you know this). In order to get him to like you… Ask him for tips on picking up women!
While it may sound counter intuitive… it works every time. He gets to give you “tips” while you get to build a relationship with him. He claims to be good at this (he’s not) but here he is giving you advice. As you do this over the course of a few weeks he is incessantly lying through his teeth about how good he is and how you should do X, Y, Z. Unless the person has no heart at all, he is going to mentally feel bad about this. Over time as he lies to you about his conquest and you “believe it” he is going to feel bad about lying to you every single day. Then you pitch your product. He’ll say yes.
Finally, if he was outright lying to you and it wasn’t an act of insecurity… He won’t give you any tips.
***Side Note: This piece of advice was by far the most uncomfortable part of the entire post. It seems down right crazy. The problem is that you’re going to have to *bend the rules* a lot as you go into higher stratospheres of income. In the end, if you’re selling a legitimate product that you know he and his friends need… You’ve done nothing wrong. Your approach was slippery, but the end result was beneficial for *everyone*. As always, art not science.***
4) There is not much you can do here. If someone is a colossal liar, so be it. If someone is lying up or down by 10-15% about their achievements… They are probably normal. In fact, when your resume is handed to someone, everyone in the recruiting department assumes a “15% exaggeration factor”.
The real benefit is catching the people who *lie down*. These people are the smartest ones in the room. They lie down because they want to see how you react when *you believe* you’re doing better than them. Our friend at Financial Samurai calls this “stealth wealth”. If you can find people who are trying to get you to show your cards… keep an eye on them as a potential threat or partner. It’s going to be one or the other.
As you all know… the guy who tries to “convince” you that he’s rich… Is never rich. If they have to tell you they are ____ then they are not. Other people will tell you.
5) This is the easiest game to play during new years. When someone says they are going to do X for their “new years resolution” keep a quick journal and see if they follow through. If someone actually follows through with what they said they were going to do… Get ready to bring out the recruiting forces.
Anyone who says they are going to do X and actually does it consistently is already in the top 10%. They may never make it to the 1% or become exceedingly wealthy, but they will *never* be average. Why? If someone consistently commits to a task and completes it, they are of value.
The only exception to breaking a resolution, is in exchange for something better. (Example: guy says he will increase his income by $20K after switching firms. Instead. He starts a side hustle and makes $40K. Clearly this is a perfectly fine reason for avoiding the firm switch).
Concluding Remarks: This type of intelligence must be cultivated. Even if you’re scoring below the 50% marker in our “exam” it is a necessary skill to at least develop. Develop your skills to the 60% marker and move onto numerics and synthesis. If you’re scoring in the 70%+ range out of the gate… here are the obvious career choices for you: Affiliate Marketing, *Sell-Side* Wall Street, Enterprise Level Sales, High End Promoting/Marketing <– only if it can be scaled, no hourly wages.
3) Numerics – The Most Difficult to Replicate
Ahh it finally hits you. Why in the world does everyone assume that being good with numbers is the end all be all of intelligence? Now you have the answer. It is nearly impossible to find this type of talent. This is both a blessing and a curse if your skills lie in numerics.
99/100 times we will wager that someone with numerical skills (enough to become a Quant or high level engineer) has social issues. They consistently use logic to explain *emotional* behavior of humans (practically no one you meet will have control of their emotions). Out of frustration, they end up being outcasts, particularly when it comes to dating.
With the negative paragraph out of the way… They are going to clear low to mid six-figures (or more) every single year without skipping a beat. Why? This type of talent is nearly impossible to learn. We will go so far as to say that it *cannot* be learned to the 1% level. You’ve got the gift or you don’t. You can try to fight reality and claim this is a “limiting belief”, but we’ve simply never seen it.
If you know someone who was not very good at math land a career at Renaissance Capital coding as a software engineer… Please let us know! (hint: they don’t exist).
Fortunately, if you’re good with numerics, you can quickly see if this is your talent because the stair steps are clearly laid out for you.
1) Are you blowing through the math section of your SAT (lets draw the line at 750)?
2) After blowing through these exams did you step on the gas pedal through an elite university? IE: you were not studying hard yet landing A-‘s or better in complex courses?
3) Can you read a statistics report and immediately laugh at the findings?
4) Did you get through the 5+ round process to work at Google or as a Quant? (obviously you’re good, ha!)
Now the questions above seem ludicrous… Because they are. This is the only form of intelligence that is easy to test and easy to measure. This is also why society focuses so much on it, they can easily *prove* if you’re good at it so it becomes a primary measure of intelligence.
No matter how many people read this post, we can easily say that less than 2% will say “Yes” to all four of the questions above.
Now before we sign off on this topic we can create a baseline of understanding without becoming a Quant. So here are some quick math questions:
1) A person earns $100/hour and works a full time job. How much do they earn?
*You should be able to do this in 5 seconds or less*
The answer is: ~$200K. Instead of taking a calculator out… the answer is simply 2,000*hourly rate. Now you will never be fooled by BS claims of riches.
2) A stock goes up 10% on day one and declines 10% on day two. How much is the stock worth in 50 days?
*You should be able to do this in about 10 seconds*
The answer is: ~75% of original value. Regular people will need to take a calculator out. They will never understand the power of compound interest. The “true answer” is closer to 78% but once you realize that it is losing 1% in value every two days, the number pops up after one iteration.
3) You invest $25,000 at age 25. It grows at 5% per year. How much do you have at age 40?
*You should be able to answer this one in 5 seconds*
The answer is: ~$50K. The true answer is slightly higher but you simply know that it would take ~14 years to double. You round up so call it a wash. Double.
Concluding Remarks: Wow. This is by far the most boring section we have ever written on the blog. Numerics is likely interesting to a very small subset of people (the ones that are extremely good at it). Positively, if you have mediocre skills when it comes to numbers, the door is wide open for a wide range of careers or business opportunities.
If you are extremely good with numbers… congrats! You’ll always be well off (financially). Become a Quant or a high-end Software Engineer.
If you are mediocre with numbers: Investment Banking, Merger Arbitrage Hedge Funds, Sales and Real Estate are all up your alley. If you’re “good” with numerics. Engineering is still on the table, but becoming a high end Quant at a competitive Wall Street firm is not.
If you found the questions above to be difficult… You should immediately improve your baseline understanding of numbers. Once basic algebra becomes easy, the high level numbers when looking at a business will be easy to calculate.
While you can go ahead and try to bring a calculator and excel with you to every meeting, it is *much* better if you don’t. Why? You can synthesize the data on the spot and play dumb if they give you too much information.
4) Synthesis – The Most Adaptable
Similar to intent, synthesis is the second unspoken form of intelligence. In short, you’re probably a fantastic person when it comes to networking. Why? You can quickly make a connection with someone. You synthesize his or her skills and put them in contact with the right people to fulfill their needs. (transaction complete!)
Ever notice that solid real estate agents are always able to network like it was engrained in their brain to do so? They are natural synthesizers and of course… this leads to solid “leads”.
The real interesting part about being able to synthesize information quickly is this: What *type* of information can you synthesize quickly?
If you can synthesize 1) numbers, 2) emotion and 3) intent all at the same time… You have a wide range of career and business options ahead of you. If you’re heavier on one versus the other… We still have solutions for you. 1) If you’re able to synthesize basic numbers and intent – You want to steer towards transactional work (Investment Banking, Private Equity); 2) If you’re able to synthesize emotion and numbers – you should look into portfolio management; 3) If you’re able to synthesize emotion and intent… but you are not good with numbers – every single product sales position is yours for the taking.
Similar to the other section lets see if you’re good at synthesizing:
1) Can you correctly predict who will like each other in your phone? Everyone believes they can do this, very few can do this accurately.
2) Can you determine what type of asset your friend(s) are willing to purchase? Everyone has a different investment strategy, but can you figure out the next “big move” someone is going to make?
3) If you have twenty meetings in a day, can you remember all of the numbers you were given without checking your notes? How accurate were you and can you connect the dots to see if anyone is lying? (Fun fact: if you meet at least 20 people, someone lied to you in the meeting and the numbers will prove it)
4) You read an in-depth statistics report and compare it to a report you had read 6 months ago that contradicts the new data. Without referring to the second report are you able to determine which one is accurate *without* emotional attachment to either?
The first two items are easiest to test as you have access to information at your finger tips: the contact function in your phone. If you can correctly predict the moves of your friends, you’re going to be very good at sales, Sell-side Wall Street, fund raising for a Private Equity firm and selling real estate.
On the other hand… If you find the first two tasks to be difficult, but find the next two tasks to be easy… You’re better off working as an engineer or at a quantitative heavy hedge fund.
Intelligence/Skills Overview: What started out as a “quick post” has somehow ballooned into a much more lengthy article. The good news is that the post can be summarized by the Venn diagram below.
For fun, here are some clear examples of the overlap:
1) James Harris Simons – would clearly fit into synthesis and numerics, Renaissance Technologies (purple)
“Why don’t we have enough teachers of math and science in the public schools? One answer is well, if they knew the subject well, they’d also know enough to work for Google or Goldman Sachs or God knows where.” – James Harris Simons (No surprise he is a mathematician!)
2) Ken Griffin – would fit more into intent and numerics. (yellow)
“We manage risk and provide liquidity. We are not a hedge fund… We use our capital base to provide liquidity to capital markets and to absorb the risk of risky assets… Our goal is to find underpriced and mispriced assets and hedge away the risk… We mitigate the macro risks that global macro managers take. We are the inverse of macro fund managers.” – Ken Griffin (no surprise they run a market neutral book!)
3) Frank Quattrone – Would fit into intent and synthesis (light blue)
“I did nothing wrong. I am confident that the investigation will show that.” – Frank Quattrone (Unquestionably the best Tech Banker today, unsurprisingly cool as a cucumber when being investigated)
4) Pure Intent (green) – All sales all the time. Zig Ziglar. Affiliate Marketing.
5) Pure Synthesis (dark blue) – Head Hunters. Glocap.
6) Pure Numerics (red) – All of the quants and engineers gathering and organizing data but not yet in position to “pull the trigger” on the meaning of said data.
If you have no skills in any of the three categories… You should get to work immediately. Of the three skills, Sales and Synthesis are the *easiest* to learn (numerics is the hardest to improve upon).
Now you see why it is so important to find out where your “intelligence” is the highest. You can quickly steer your life into a specific career or business model. If you know at age 20 that your skills are in sales and synthesis… Don’t bother with becoming an engineer or working at a numerics heavy hedge fund. You’ll get paved.
Instead, go into Banking or Private Equity and suddenly you’ll find yourself moving up the ranks! The belief that everyone should go into X career is simply non-sense. If you can make Vice President or above in any of the fields mentioned here you’re not going to be hurting for money. You will be raking it in. Making at *minimum* $300-400K a year and you won’t even be thirty.
Finally, if you’re older… Then time is not on your side. You need to find out which area is best for you… starting yesterday. Get cracking on improving your skills in that arena. You need to work *harder* than everyone your age since you are playing catch up.
5) Artistic – The Call Option
We’ve separated this section out for a reason… It is a winner take all market. We can throw athletics into this category as well. If you’re truly at the top of the food chain in terms of artistic abilities or athletic abilities… You’re going to make a lot of money.
While Lil’ Wayne may fail a standardized test… He’ll make more money in a year than most people will make over 5, 10 or even 100 lifetimes. If that’s not a form of “intelligence” we don’t know what is. We’d happily trade his artistic/rap abilities over a 90th percentile score on some meaningless aptitude test.
The Action Bullets:
– If you’re not where you want to be financially, time is *not* on your side. This is a stone cold reality. It only gets harder. If you don’t take action today, you’re simply giving the competition a head start.
– What are you good at? Intent, Synthesis or Numerics? You don’t need to be good at all three (if so congrats!).
– If you find out you’re not great at any of the three (scoring below 50% in all categories across 100 test runs) then you should invest in Sales first. There are too many products that need to be sold and there are too many ways to make money in sales. It is also the easiest to learn.
– Do not fit a square peg in a round hole. If you’re great at numerics there is no reason to change your life and try to become a real estate agent. *leverage your talents*. There is money everywhere. Again. Leverage *your* talents not what other people are “telling you” to do.
– If you’re in the top 1% when it comes to the arts… Congrats! Go ahead and go up the food chain and make that $$$.
WEALTH BUILDING RECOMMENDATION
Manage Your Finances In One Place: One of the best ways to become financially independent is by signing up with Personal Capital to track your finances for free. They are an award-winning online platform that aggregates all your financial accounts in one place so you can see where you can optimize your money, track your net worth, manage your cash flow, and analyze your portfolio for excess fees.
They’re best two features are their Portfolio Fee Analyzer and their Retirement Planner. The Portfolio Fee Analyzer showed me how I was paying over $2,000 a year in portfolio fees I had no idea I was hemorrhaging! The Retirement Planner users your real input to run a sophisticated Monte Carlo Algorithm to ascertain whether your retirement is on track. Simply link up all your accounts, click Advisor Tools on the top, and then choose either Investment Checkup or Retirement Planner to get started.
There is no better online free financial tool than Personal Capital. The firm is run by Bill Harris, the ex-CEO of Intuit and Paypal. They’ve got some of the most trusted investors and partners, included USAA, America’s leading financial institution which first started serving our military families.
Updated for 2017 and beyond.