Wednesday, 26 September 2012

Too much financial news is a bad thing! It makes it hard to spot good ideas

Although I had heard of it through friends, today was the first time I ever tuned into Bloomberg TV which has a range of interesting videos for people interested in finance and politics (their sports coverage is terrible).

However the more I thought about it the more I realised that I was filling my head with those pieces of information that add very little in terms of useful knowledge that I can then go and invest upon.  To be sure I was getting a lot of good information the markets and how they are trading and things which are impacting them but then I started to think about how I could use this information and realised that it was essentially useless.

The advent of the 24 hour business news cycle is not necessarily a positive for investors, especially those investors like myself who prefer to take a longer run view of issues, trends and investments.  It adds a lot of useless information so that you need to dig further and harder to find the gems that make it all worthwhile. 

So the question for all investors becomes how do you balance the need to understand the market and know what you need to know with time constraints and potential information overload?

I find the following serves me well and can recommend it as a strategy for investors looking for a way to manage their information flows
  1. Use a daily financial newspaper (such as the AFR or WSJ) to get your market information and general news about what is happening
    • There may be less information than what is available through aggregating sources on the internet but this is a good thing - newspapers typically only print the headline stuff and this is what you want to know
    • You may miss some points but in the big scheme of things this isnt a big deal
  2. Avoid watching 24 business news TV
    • It honestly adds nothing new and will often focus you on the short term when you should be focusing on the long term
  3. Use the internet / online sources when you want to research a specific idea
    • The wealth of information on the internet is perfect for when you want to research an idea that you have
    • This is the time you use things like Bloomberg TV - their search function lets you find information on any specific topic
    • You want to be able to narrow your search topic as much as you can before you start to research though
  4. Remember that any 'great investment idea' on TV or media or other public domain is probably already fully valued into the share price
    • Investing takes time and effort - you are not going to get great investment ideas from things that are published in the public domain
    • I use ideas in the public domain to find out how investors, who I respect, think about certain investments - I never actually follow those investments myself
    • Note that goes for sites like this one as well.  I will never post about an idea until I have already put my position on (after I put my position on I'll talk about it all day long)
Using the above strategy
, hopefully you wont be inundated with information and you can spend time coming up with your own original ideas.  If you have any other strategies I would love to hear them so please post below.

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