Impact Of Information

What is impact or correlation between amount of information consumed and success as an investor?

While I think it would be difficult to quantify or measure this, my gut tells me that it's an inverse correlation.  In other words, I think the more information you try to consume, digest and incorporate into your investment decisions, the worse your investment experience will be over time.

OK, so am I suggesting that you make decisions in a vacuum?  Of course not.

However, I do think there's an opportunity to positively impact your investment results by focusing on the things that matter.  And perhaps more importantly, you can ignore everything else.

So, what matters?  

1.  Your asset allocation, or mix, between stocks, bonds and cash.

2.  Your investment costs (fees and/or taxes).

3.  Your long-term investment/wealth/financial plan.

Naturally, let's identify some of the many things that don't matter:

1.  Morningstar ratings

2.  Jim Cramer/CNBC/Financial Media/Mainstream Media

3.  Stock Picking

4.  Timing the Market

5.  Investment Newsletters

6.  Having 2, 3 or more financial advisors so you can get different opinions and ideas

7.  The next quarterly earnings release

8.  Interest rates, the price of oil, the current level of the S&P 500 or Dow Jones Industrial Average, etc.

And the list goes on . . .

Here's the key:  There are a few, important things you can control when it comes to investing and wealth management.  And there are many, unimportant things that you can't control even if you wanted to.

What I find, however, is that most people, including professional investors and advisors, spend the majority of their time, money and other resources trying to control things that they can't.  It's human nature to want to create a sense of order where there is none or to want to believe we have control when we don't, but I would encourage you to fight this natural tendency.

There is a better way.  Focus on things you can control and let everything else go.  Some of you may seek the help of a professional advisor to help with this endeavor, but whether or not you choose professional advice or choose to go it alone, you don't have to listen to all the noise that permeates our daily lives about how best to invest your money.

I think this will lead to better investment results and it will certainly lower your stress levels.

If you have any questions or comments about this, please leave your feedback as a comment below.