Wall Street produces an almost infinite amount of information. Research reports, analysts reports, quarterly reports, annual reports, interviews, prospectuses, SEC filings, and so on. How to not let it get overwhelming?
Sometimes it feels that we are drowning in the tyranny of choices when confronted with the need to make financial decisions, especially when starting out. And when we start to read, the information firehose manifests. How to not drown in the flood?
It Depends
From my view, it pays to ignore as much as possible. I aim to ignore things that do not apply to me. Although I am subject, like most people, to all sorts of advertising and media, most of it does not apply to me. I do not eat in the restaurants advertised on television. I do not buy luxury cars. And so on. Similarly, most of the financial press information avalanche is not for me.
Where to Begin?
It took me a long time to understand that I needed to narrow my focus to a very small subset of information. In the beginning, I thought that more information was good: that the more the better. But it is too easy to be overwhelmed, and in so doing be paralyzed by the tyranny of choice. Too much information is as bad, if not worse, than too little.
Once I was able to focus my vision to what was important and useful to me, the rest just becomes, as it always was, noise. Most of the time most of the noise is there to be ignored. And should be.
The Danger
The hazard of paying attention to too much unnecessary material is that it distracts us from our goals, it confuses us, it diverts our energy and focus. Sometimes it motivates us to do inappropriate things and take needless risks. So learning how to know what I need to know and ignore the rest is a prime life skill, especially in financial matters.
Where I Am
Most of the financial press is focused on aiming for capital gains. Buy now, hopefully sell later for a higher price. This has numerous pitfalls which have been documented here many times, for example one is here.
As previously mentioned, I am a dividend investor. As a result, the news about the next big thing, or what someone is betting to make a killing, is now of little or no interest to me. More power to them if they can hit it off. But for me, slow and steady dividends take much of the guesswork out of my investing. I get income regardless of stock prices. Prices increase or prices decrease, dividends just generally continue. And since most of my holdings are set to dividend reinvestment, dividends cause my share count to increase, which means an ever-increasing amount of dividends.
All of this without much need to know which stocks increased today or which ones decreased. Of course I pay attention, but I don’t get motivated to do anything just because there was some irrelevant news.
How do you handle Wall Street’s information deluge? Let me know here.
The illustration “The Creation of the Sampo“ (1917) by Joseph Alanen, is said to be inspired by the Kalevala, the epic poem of Finland. Courtesy, University of Toronto.
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