A few years ago, a man gave a speech. He told the audience he never imagined that he’d someday be employed by “the argumentative young boy who grew up in my house, eating my food and using my name.” 

To say the boy was a handful is an understatement. He refused to clean his room and frequently showed up late for dinner. When he was 12, he got in such a heated argument with his mother that his father was compelled to throw a glass of water in his son’s face. Speaking to a counselor about the incident, the boy proclaimed, “I’m at war with my parents over who is in control.”

The man who gave the speech is Bill Gates, Sr.

His son, of course, is Bill Gates, Jr., the richest person in the world.

Bill Gates Jr. continued his rule-breaking ways later in life. He famously dropped out of Harvard to start Microsoft, and a couple years ago, during a TED talk, he let mosquitos loose on the audience.

Gates is a rebel. And that is a key part of why he’s so successful.

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A recent study found that defiant children who exhibit a penchant for rule-breaking are more likely to succeed in their careers than their responsible, rule-abiding peers.

In 1968, researchers collected data to ascertain the personality characteristics of over 700 children. When the children reached the age of 52, researchers checked back to see how they progressed as adults. They found the rule-breaking trait among children was “the best non-cognitive predictor of higher income.” 

So, if you have a defiant child or grandchild, maybe you’re doing something right after all!

The point here is not to imply that parents should strive to raise Machiavellian children or encourage misbehavior. What it does speak to, however, is that originality is a virtue we may want to embrace more than we do.

Human beings are attracted to novelty. We gladly pay extra for it. Whether it’s a good, service, or person we want to join our team. Creative expression which adds value to others’ lives will always be valuable and justly rewarded by society.

On the other end of the spectrum—commoditized, conventional, conformist workers will increasingly fall victim to the ruthless side of Joseph Schumpeter’s ‘creative destruction principle.’ It's the nature of the economy. Progress for all invariably means misery for some; i.e. the displaced.

The workplace which rewarded rule-breakers over the last forty years will likely continue to do so in the next forty years. In the current so-called Information Age, rules-based, repetitive jobs are increasingly being automated. 

Who will program the rules the robots follow? Those who can think outside the box to imagine better systems and processes. Those who aren't afraid to reinvent the rules.  

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Actions drive results. Thus, no one should play the same game as everyone else, and expect a uniquely superior outcome. This is a simple, intuitive idea, but it’s largely missing from conventional school and parenting playbooks. 

Application to investing? Consider this: in 2003, around 50,000 candidates sat for CFA exams. However, by 2014 that number swelled to 160,000 candidates. The increase in very well-educated investors makes it a smarter overall market.

The CFA does not explicitly teach anyone how to beat the market, though. Rather, it arms students with financial tools. Learning how to operate tools, especially complicated ones, is a useful part of mastering any craft, but it’s what you build that counts.  

“Learn the rules like a pro so that you can break them like an artist.”

- Pablo Picasso

Any CFA can read a financial statement. Not all CFAs can smartly forecast how those financial statements will evolve in the future, because that requires multidimensional, creative thinking—something many quants and computers have a difficult time mastering. Dare I say, there is an artistic side to investing, often overlooked by a mass of conventional ‘rule-followers.’  

Jeff Gundlach is a serious rebel of the investment world. He is the founder of Doubleline Capital and considered by many to be the top bond investor of the modern era. One reason Gundlach routinely shreds his investing competition is a unique ability to think in abstract terms. Put simply, he connects dots in ways others don’t.

He also breaks the rules by having the courage to make bold predictions, many of which turn out right. Like forecasting Trump’s election victory a year in advance, and sticking with the call right up to the election, when virtually everyone thought he was wrong. Until he wasn’t.

Gundlach does not just read the papers and regurgitate the consensus view in his investor presentations and interviews. That’s what everyone else does.

This man does something harder. He interprets the news.

He figures out how the rest of us see events, then he creatively connects the dots on how things may turn out down the road, where surprise power lurks, and where mispricing may be hiding. Creative thinking gets his investors to the right places, at the right times.  

Whether any of us like it or not, people like Gundlach and Gates will continue to win the future, because they have two magical ingredients working in their favor: creativity and the courage to express it. 

Source: Student Characteristics and Behaviors at Age 12 Predict Occupational Success 40 Years Later Over and Above Childhood IQ and Parental Socioeconomic Status, American Psychological Association, 2015. 

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