Actually, you both are correct. Hitler did suffer from megalomania. He saw himself as another Frederick the Great and Bismarck at the same time. What I would term as his stupidity, is that he failed to recognize that he had at his disposal probably the most fantastic collection of military minds of the time. His problem was that he could not admit this to himself. He hated having generals tell him anything about war. Coupled with his distate for anyone with "von" in their name, he was doomed to utter failure.
The truth is, had Hitler stuck to politics and let the generals run the war, Germany's defeat would not have been nearly so decisive- if at all. The specter of the two-front war, always Germany's greatest nightmare, was avoided assidiously early on. This was probably one of the things that pushed the very-proud German people towards Hitler. He was accomplishing great things without war at first, and cheaply for awhile after. The thing that Hitler was capitalizing on was the renewed pride of Germany after the disgrace of the Versailles Treaty of World War I.