Information Overload

Warning! Too much information is bad for your financial health. Unfortunately, we’re living in a world where information is travelling faster than light speed. News organizations are competing for your clicks and your eyeballs every millisecond of the day. Information is coming at you from every direction; your television, your radio, your cell phone, and through your friends’ social media shares. It takes effort to avoid information these days. This information is hard to digest, let alone make sense of it all.

Here is some advice from Jack Bogle, founder of Vanguard Group:

“when you get your retirement plan statement every month, don’t open it. Don’t peek. When you retire, open the statement and believe me if you’ve been putting money away in there for 40 to 50 years, you’ll need a cardiologist standing by you when you open it.”

Extreme advice, but I would love to see the reaction of someone who actually did that.

How many times a day do you look at your phone? The average person touches their phone 2,617 times a day according to this study!

App developers know something that behavioral economists have tried to teach investors; that humans are emotional creatures. Instagram batches “likes” in hopes of getting users to open the app more often. Facebook ran a secret experiment on users’ moods. In an April 2017 story for 60 Minutes, Anderson Cooper says, “You call this a ‘race to the bottom of the brain stem.’ It’s a race to the most primitive emotions we have? Fear, anxiety, loneliness, all these things?” The segment, “Brain Hacking” is about how phone apps are engineered to get us hooked.

Fear and greed are the emotions that rule the market. You’ve probably seen some version of this chart before.

Every time you read a sensational headline (hint: they all are) and each time you listen to a financial pundit on television, you are tempting fear and greed. Long-term investing requires a bit of courage and nerves of steel. It also calls for humility to admit that mortal humans cannot predict the future, and you are a mortal human.

What can investors do to combat the constant barrage of information? After all, we can’t stop consuming information altogether. Here are a few suggestions that help me.

1. Turn off the television. The 24-hour news cycle is a long-term investor’s enemy. Reporters do not have time to digest the context, let alone facts, of stories at such breakneck speed. Let nightly news programs decipher the day’s news for you, or better yet, watch weekly synopsis shows or read weekly publications. I haven’t had a cable subscription since 2009, but I still watch Bloomberg and PBS on my iPad.

2. Review news over the past week, month, or year. At the end of each quarter, I review the biggest news stories to write a quarterly market letter. I find this review a very useful way to sift through what was really important and view events with a broader perspective. I especially enjoy recaps of yearly news each December.

3. Go to the primary source. You may recall the concept of primary sources from a research project in high school. Rather than reading thousands of interpretations of data, try finding the primary source of information. I spend a lot of time on the websites of the Federal Reserve, the Bureau of Labor Statistics, the U.S. Energy Information Administration, the Bureau of Economic Analysis, and many more.

4. Read more books and less articles. There are millions of articles (like this one!) on the internet, in magazines, or in newspapers. The demand for constant “content” online has writers furiously typing their thoughts on every potential angle of an issue. There’s a whole lot of “content” out there without a lot of substance. If you want to learn more about a topic, read a book. I’m a slow reader, but I try to read at least one book a month.

5. Take information vacations. Have you ever thought about taking a vacation to a place with no internet service? The constant barrage of information sometimes causes stress and anxiety. I take an annual break from social media, email, and television each year around Thanksgiving. I wish I took more information vacations. I always come back to it refreshed, with a clearer mind.

“Whenever you check for a new post on Instagram or whenever you go to The New York Times to see if there’s a new thing, it’s not even about the content,” he explained to GQ Style. “It’s just about seeing a new thing. You get addicted to that feeling. You’re not going to be able to control yourself. So the only way to fight that is to take yourself out of the equation and remove all these things. What happens is, eventually you forget about it. You don’t care anymore.” This is comedian Aziz Ansari talking about removing the internet from his smartphone.

As the information overload grows larger, I think it will become more and more important for investors to find effective ways of digging through the clutter.