Dealing With Information Overload When Investing

By: IS
Date posted: 02.22.2012 (5:00 am) 

It’s a rather common feeling these days isn’t it? I generally feel like I have a fairly good grasp of most stocks that I follow but even that isn’t always true.

Think about how things were in previous generations:

Someone thinking about buying a stock might have bought a newspaper, looked at a few columns or an article about that company and tried to figure out how good of an investment it is. That research would probably have taken a few minutes…then what?

Researching A Stock In 1960

-Reading newspaper to get stock quotes and economic analysis

Researching A Stock In 2012

These days, that process can lead you down a very exhausting road:

-Looking at charts getting technical indicators such as trend analysis
-Going to read the company’s financial reports
-Listening to earnings calls as well as Q&A with analysts
-Going through Wall Street and other research which is often available on the web
-Going through media such as the Wall Street Journal and The Globe and Mail
-Going through Blogs analysis (this one alone could take many days)
-Looking at social media talk about the stock (Twitter, etc)
-Doing a similar analysis for the sector and for both clients and suppliers

There Is No Way To “Complete” Your Analysis

At what point would you consider that you’ve gone through all of the information? It just seems to me like you can never reach that point. At that point, the game becomes as much about being able to judge:

-what information has most value
-how to go through it quickly but efficiently
-how to either come to a conclusion or move on to a new stock if it non conclusive

Personally the RSS Reader Is My “Filter”

I personally have many of my top information sources setup in my RSS reader and every day I go through them very quickly marking those that I want to read further. How? I guess to some extent I must rely on the title and images to seem accurate as I probably spend a few seconds at most to make that determination.

How do you deal with information overload when investing?

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