An investor can ask, "Find me the most intelligent hedge fund manager. Someone else may say, "I want the smartest manager in the hedge fund space". Saying that you want an intelligent manager may not be the same as saying you want a smart manager. There is a difference between intelligence and smarts, so says, Heather Butler in the recent Scientific American article, "Why do smart do dumb things, Intelligence is not the same as critical thinking and the difference matters".

There is no doubt that intelligence as measured by IQ is important, but critical thinking may be more important with making life choices and with being effective on the job. A critical thinker is a good flexible thinker when faced with new problems and who is a skeptic that needs evidence. Critical thinkers are better at overcoming biases in thinking. Researchers who try to measure critical thinking focus on verbal reasoning, argument analysis, hypothesis testing, probabilistic reasoning, and problem solving. This is not what is tested with IQ. So the next time someone tells you a hedge fund manager is intelligent, ask whether he is smart. If given a choice, I want the smart one.