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Money Choking Information: Separating The Wheat From The Chaff

By Wade SlomeMarket OverviewJul 13, 2013 05:08AM ET
www.investing.com/analysis/money-choking-information:-separating-the-wheat-from-the-chaff-175304
Money Choking Information: Separating The Wheat From The Chaff
By Wade Slome   |  Jul 13, 2013 05:08AM ET
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Every day, I make my way I into the office before the market opening bell, preparing myself to gorge on a massive heaping of news stories and headlines. But scarfing down tons of tweets and hundreds of headlines is not enough. Magazines, newspapers, conference calls, blogs, presentations, conferences, interviews, television clips and software lists are but just a few additional aspects to my steady information regime. Like shopping down each and every aisle of the grocery store, an annoying tendency I admittedly commit, there are plenty of healthy and unhealthy items to choose from. The key is identifying the items that are the best for your financial health. After carrying out this gluttonous information-stuffing business for over twenty years, I’ve gotten much better at separating the data wheat from information chaff.

One might ask, “What harmless headline or innocent anecdote could possibly cause harmful financial indigestion?” I don’t know about you, but in recent months, gobbling down these following headlines without discretion can lead to a serious case of acid reflux:
  • “Stocks Tumble as Bernanke Discusses Tapering”USA Today
  • “China’s Economy is Freezing Up. How Freaked Out Should We Be?”Washington Post
  • ” ‘Suffocating in the Streets’: Chemical Weapons Attack Reported in Syria”NBC News
  • “Europe’s Zombie Banks – Blight of the Living Dead”The Economist
  • “Threats from Extremists as Egypt Slides into Turmoil”The Times
  • “Japan Market Plunge Sparks Global Sell-Off”Los Angeles Times
I think you get the idea. No wonder investors collectively are acting like a deer in headlights, resulting in declining stock market participation – a 15-year low.

In the world of competitive eating, the execution of improper consumption technique can lead to a so-called “reversal of fortune,” as can be experienced by the last video on my article, Baseball and Hot Dogs. Disciplined processes are needed to prevent such an event when devouring excessive amounts of information. This is a timely topic as Joey Chestnut recently set a new world record by eating 69 hot dogs in 10 minutes.

While digesting the avalanche of daily data is quite complex, understanding the harmful consequences of doing so is quite simple. Carl Richards, a contributor to the The New York Times and Morningstar Advisor does a great job of outlining the detrimental impact of information consumption on investors’ wealth and happiness through minimalist charts found at BehaviorGap.

Here is my co-mingled version of Richards’ work:
Market Data
Market Data

As Mark Twain said, “If you don’t read the newspaper, you are uninformed. If you do read the newspaper, you are misinformed.” It’s perfectly fine to remain current with major economic, political and worldly events, but the consequences to overreacting to the ever-changing news flow can be disastrous to your financial and personal well-being. Managing your life savings can be stressful and if not managed correctly will damage your financial goals.

If you do not have the time, interest, or self-control to digest the massive buffet of endless information, do yourself a favor and find an experienced and trusted advisor that can assist you with the Heimlich maneuverm so you don’t choke on the infinite amount of data.

DISCLOSURE: Sidoxia Capital Management (SCM) and some of its clients hold positions in certain exchange traded funds (ETFs) and CMCSA, but at the time of publishing, SCM had no direct position in GCI, WPO, NYT, MORN or any other security referenced in this article. No information accessed through the Investing Caffeine (IC) website constitutes investment, financial, legal, tax or other advice nor is to be relied on in making an investment or other decision.

Money Choking Information: Separating The Wheat From The Chaff
 

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Money Choking Information: Separating The Wheat From The Chaff

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