Wealth Management & Financial Planning

Wealth Management & Financial Planning

Investing and Information Overload

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When it comes to our financial nest eggs, we all want to make the best decisions possible. Scouring information sources often seems like a good place to start.  A common question is, “What book or paper should I read to better understand retirement planning?”

In an era of unprecedented access to data, information can be a tricky resource. Books, blogs and news sites aim to explain varied aspects of investing such as options, stocks and even how the trading exchanges work. We refer to such content as resource information and this fundamental core knowledge is largely timeless.

But other investment information is more subjective. Books exploring past market events are naturally mixed with facts as well as author bias. Several books about the Great Recession address the same historic events but draw dramatically different conclusions. Similarly, books about the Great Depression offer disparate perspectives on the conflux of economic events and outcomes. Investors must guard against viewing an author’s opinion as a singular reality. If the premise is flawed or downright wrong, an investor’s nest egg could be in jeopardy.

It’s important to remember that information accessibility is not a reliable indicator of integrity. Search engines often retrieve the most relevant data for a given term, but not the most updated and timely information.   No one can digest all of the data available. As advisers and analysts, our team filters the flow of data, focusing on sources that we trust and have verified over time. Similar to placing trust in a particular brand name, our research analysts rely on independent sources that have earned our trust based on their reliability over time.

So what should the non-professional investor read? There is no single title to recommend as every situation is unique. The fees professional advisory firms pay for trusted information sources are not reasonable for the average investor. Sure, there is an abundance of free research available but be remember the adage that you often get what you pay for!

Focus on building a process rather than accumulating data. Over the years I have seen fundamental investors succeed while others failed. The same is true for investors who try to rely on technical indicators. Some indicators are simply better than others.

 “The Millionaire Next Door” is a perennial best-seller among amateur investors. The author studied individuals who bought and held stocks for many years or even decades. These individuals became rich by buying and holding, not by trading. However, the author failed to study the poor folks on the other side of the house that bought and held stocks that didn't fare so well. The book delivered a great tale and encouraged many individuals to follow one path that provided success. A lot of books were sold, but not everyone who buys and holds will win the battle.

Regardless of the many contradictory sources and viewpoints, an investor’s best strategy is to develop a process and stick to it. First and foremost, reading should support the investor’s intentional process.

Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and entertainment purposes only. I or my affiliates may hold positions in securities mentioned in the blog. Please see my Disclosure page for full disclaimer.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column offset=”vc_hidden-lg vc_hidden-md vc_hidden-sm”][vc_widget_sidebar sidebar_id=”sidebar-main”][/vc_column][/vc_row]

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