Sunday, April 27, 2008

Too Much Noise Can Make You Poor!

Trust me - everthing's fine!
There are newspapers, magazines, newsletters, blogs, RSS feeds, TV channels, news feeds, interviews and assessments - and you try to keep up! You read a few magazines, subscribe to some blogs, scan the newspaper and catch CNBC a few times a day. The question is - are you any smarter after absorbing all this information?

Vested Interest
Everyone has an vested interest in what they do - including you. You want information about the ecomony or the market so you can make better investing decisions and eventually make more money. CNBC has an interest in getting high ratings so they go for hype and sensationalism. The political figures say things that will help them get elected. The analysts tout their investment bank's offering so they can make more money. The special guest wants to plug his book and the list goes on.

Everyone is in it for something so be careful what you believe and what you act upon. What may be good for someone else may not be good for you.

What is Your Pitch
You can hear and read all you want but finally you have to come up with your own decisions. And your decision needs to be grounded in your research and analysis. You have heard others, now what do you say? If you spend most of your time immersed in the media - when are you finding time to do your own research. Don't make the mistake of labelling others work as your own. This is one area where copying someone's work may not be very prudent.

Follow the Herd
If you are not careful the noise can overwhelm you. You start to believe what the media pumps out. When you are confronted with the same message over and over again - you also start to fall for it. Obviously being comfortable in your own assessment and analysis is important but you have to learn to manage the noise.

Switch off the TV for a while. Skip the newspaper for a day. Ignore the hype and instead put your investments on long-term autopilot. Do your research, buy quality business, buy the markets, diversify and let compounding work for you.

If you enjoyed this post, consider subscribing to a full RSS feed or get regular updates via email.

No comments: