Financial Literacy

The Reason You’ll Never Be a Billionaire


“A genius is not born but is educated and trained… When a child is born healthy, it is a potential genius.”

– László Polgár, Hungarian educator and chess teacher

You may have heard of the “10,000-hour rule.”

Developed by psychologist Anders Ericsson – and popularized by Malcolm Gladwell in his national best-seller Outliers – it states that across all fields of human endeavor, it takes about 10,000 hours of “deliberate practice” to master a skill.

Deliberate practice requires well-defined, specific goals, a coach who can give you continuous feedback, and regular practice outside of your comfort zone.

Whether it’s learning to play the piano, winning a medal in the Olympics or developing into a world-class ballet dancer…

You must put in about 20 hours a week over a 10-year period to become a master at your craft.

That’s why musical prodigies, Olympic athletes and global soccer stars all start at an early age.

The conclusion is cheerfully egalitarian, if daunting.

As long as you put in your 10,000 hours of deliberate practice, you too can master any field you choose.

So what does this have to do (or not) with the world of investing?

Let me explain…

László Polgár’s Remarkable Experiment

Hungarian grandmaster Judit Polgár is a chess phenomenon.

One of the top female chess players of all time, she achieved the title of grandmaster at 15 years old.

In doing so, she broke the record of former world champion Bobby Fischer.

Like Mozart, Judit Polgár is a rare natural talent…

Or is she?

As it turns out, Judit and her two older sisters are the products of an unprecedented educational experiment carried out by their father, László Polgár.

The elder Polgár’s lifelong mission?

To test his conviction that he could turn any child into a prodigy.

As it turns out, Polgár succeeded in turning each of his daughters into chess grandmasters.

By all measures, his experiment was a remarkable success.

But as successful as László Polgár was…

He could not have turned each of his daughters into the next George Soros – fellow Hungarian, speculator and billionaire.

Here’s why…


My Journey Through 10,000 Hours

A few years ago, I tallied up the hours I had put into mastering the “craft of investing.”

Between my studies and my work as a portfolio manager, I tallied 10,000 hours quite easily.

Yet two things struck me…

First, the least useful part of my experience was the hours I spent as a mutual fund manager.

Too much of my time was frittered away with pointless meetings that had nothing to do with investing.

Next to none of the time I spent met the standard of Anders Ericsson’s deliberate practice.

Second, I learned that becoming a hotshot mutual fund manager had nothing to do with mastering the craft of investing.

For three years in the ’90s, I sat next to one of the top fund managers in the United Kingdom.

He was a high school dropout who had worked himself up the corporate ladder from a backroom job he took at the age of 16.

He dismissed my admittedly conventional and academic efforts to master the investment profession as “a bunch of bollocks” – a term that’s considered to be pretty vulgar in the U.K.

After all, he had succeeded by trusting his instincts.

Sadly for him, his sparkling investment track record lost its shine as the years rolled on.

He turned out to be what author Nassim Taleb calls “a lucky fool.”

Investing as an “Extreme Sport”

Here’s the uncomfortable reality…

The 10,000-hour rule may apply to learning to play the violin, winning a world championship in Brazilian jiujitsu or becoming a grandmaster in chess.

But it does not apply to producing a blockbuster movie, getting elected president of the United States or becoming the next George Soros.

In his best-seller The Black Swan, Nassim Taleb refers to these two worlds as “Mediocristan” and “Extremistan.”

Mediocristan is the world of lawyers, dentists and journalists. Become good at your craft, and you will make a decent living.

But there are only so many hours to bill… and so many cavities to fill.

Your chance of earning, say, $5 million a year is virtually nil.

In contrast, Extremistan is the world of internet entrepreneurs, Hollywood stars and lucky hedge fund managers.

In 2000, Mark Cuban made $5.7 billion selling Broadcast to Yahoo – that’s more money than a hundred partners at New York law firms make in their lifetimes.

Much of the success you see people achieve in Extremistan is due to luck rather than any innate skill.

And Wall Street is the very incarnation of Extremistan.

Every time you invest, your bets are placed right alongside those of Warren Buffett and George Soros.

Yet over the course of any single day, month or even year, you can outperform the greatest investors in history… simply due to dumb luck – no 10,000 hours of deliberate practice required.

Compare that outcome with what would happen if you sat across a chessboard from Judit Polgár…

Lessons From László

Can you become one of the 1% of active traders who are consistently profitable?

Sure you can.

You may even make a good living.

You might not have a “Mark Cuban moment” that turns you into a billionaire…

But in the coming weeks and months, I’ll teach you what you need to know to help you achieve your own financial freedom…

No 10,000 hours of deliberate practice needed.

Good investing,



An accomplished investment advisor and widely recognized expert on quantitative investing, global investing and exchange-traded funds, Nicholas has been a regular commentator on CNN International and Fox Business Network. He has also been cited in The Wall Street JournalFinancial TimesNewsweek, Fox Business News, CBS, MarketWatch, Yahoo Finance and MSN Money Central. Nicholas holds a bachelor’s and a master’s from Stanford University and a J.D. from Harvard Law School. It’s no wonder his groundbreaking content is published regularly in the free daily e-letter Liberty Through Wealth.

Articles by
Related Articles