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Adrian Mastracci, president of
KCM Wealth Management, says "Over the years, I’ve developed my favourite strategies for taming the ballooning overload. My set of filters to put the information channel on a diet." |
Vancouver, BC (June 12, 2006): Are investors getting overwhelmed by the mountains of readily available financial information?
Anthony J. D'Angelo, in his book ‘The College Blue Book’ said, “In your thirst for knowledge, be sure not to drown in all the information.”
Adrian Mastracci, investment counsel at Vancouver’s fee-only KCM Wealth Management, comments, “More and more investors express the frustrations of sifting through enormous volumes of daily information. All in the quest to make sense of what applies to the precious portfolio.”
It’s quite easy to drown along the information highway. The sheer amount of information increases every year. Much of it is conflicting. Still, investors don’t want to chance missing anything.
Investors have an avid appetite for the daily volumes of research, data, predictions and advice. Many have difficulty separating the relevant stuff from the noise of the day.
They search the internet, newspapers, television, radio, journals, investment newsletters, magazines, press releases, quarterly and annual reports... just to name a few. It's exhausting, to say the least.
Some investors are plugged in all of the time. Totally drenched in information overload. Perhaps, it’s time for a little diet to curb the appetite.
Perspective helps
I know first hand about having to reduce the impact of daily information. I’ve seen a marked increase in the overload.
Let me wrap some perspective around the overloaded information highway. I firmly believe that investors have become over-obsessed with it.
I checked the June 12 to July 07, 2006 calendar of US economic data releases. I tallied no fewer than 49 listed releases, all sporting specific expectations. Something for everyone in just four weeks.
The releases include the trade balance, GDP, unemployment, construction spending, inflation figures, auto sales…….. They have leading indicators, lagging indicators, and on and on.
That only scratches the surface. The 49 releases are just the most visible. There is plenty more where they come from. Further, the pace of releases is similar during bear and bull markets.
Any data release could materially affect the markets. It depends on actual versus expected results. On some days, bad news releases can even be good news for the markets, and vice versa.
It feels that for every prediction of optimism there is one of pessimism. And there are so many interpretations of the expectations. The upcoming 49 releases are a good example.
I empathize
I empathize with investor frustrations. It’s a huge undertaking to keep up. Even for professionals who are trained to separate important information from daily noise.
Data releases are just one piece of the puzzle. Going overboard on any of them is futile. Investors can’t change the outcomes. They would do themselves a giant favour to give it a rest.
The big question is how do investors make informed decisions with the stacks of available information. More is not always better. So, just where are there information filters?
That’s the answer. Investors need to do some filtering about what’s important, and what’s not. In some cases, plenty of filtering.
My filters
Being in the profession means that I get an even bigger daily overload sent my way than most investors. I can tell you that I have no plans to drown in the heaps of information.
Over the years, I’ve developed my favourite strategies for taming the ballooning overload. My set of filters to put the information channel on a diet.
Here are three of my favourite filters:
- Find the nerve to ignore the daily onslaught of research, economic data, predictions and advice. Listen, but don't get distracted by all the noise.
- Develop complete confidence in the chosen investment strategy before implementing it. That reduces the need for the latest facts and figures along the journey.
- Think total portfolio, avoid making hasty decisions and stick to a disciplined approach. This relies less on being plugged into the daily information tap.
A simple diet curbs the appetite along the crowded information highway. Ease up and take a breather. It helps in making better investment decisions.
In my view, the piles of daily information are too often just needless noise. A diet that keeps the overload in check is my medicine of choice. No drowning please.
I welcome your questions, comments and feedback.
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