There has been a proliferation of financial news. You can drown in waves of it if you do not wear a life jacket. Most of it is badly written, poorly researched and aimed at selling you something…typically fear. We should know this by now. Fear sells.
Most financial news is unhelpful to wealth creation because wealth creation requires optimism – optimism about your business, career or investment portfolio. Clearly, there are times for caution, but too often, financial news focuses on the negative which is frequently wrong. That said, not all financial news is bad. How then, should we consume financial news?
Here are a few of my filters:
- Does the article explain the past, extrapolate the past or is it forward-looking? You want forward-looking research. Trends change and it’s at the turning points that we can destroy wealth by betting on the trend.
- Is it based on facts or opinion and what can the writer or commentators gain from convincing you of their opinion?
- What is the time horizon of the article and does this align with your decision framework? Most financial news explains the past or focuses on the immediate future. It has very little use for decision making for entrepreneurs or personal financial decisions.
- What is the shelf-life of the news article? Generally, the longer the shelf-life, the better the chances that the information is well researched and geared towards long-term decisions.
- Does the article show up new information, not previously assimilated by financial markets or economic participants? If the news is in line with consensus expectations, it is already factored in by most knowledgeable market participants.
Then we should check the news against our own screens or filters. Does the information agree or clash with our own political or economic thinking? If it differs, it’s worth paying attention to the reasons and opinions which differ from our own. There may be learning in that. There is very little of this going on in social media, especially Twitter, which is why I switched off Twitter.
In fact, I don’t read much daily financial news. I find it hinders a strategic focus. I prefer to do deep dives into data at longer intervals or read weekly publications with excellent journalism. Daily consumption of financial news might make you sound intelligent or ‘in-the-know’ at dinner parties but it is generally irrelevant for your most important decisions.
Time to switch off some news?
//08 November 2019