More Noise, Less Signal

On Friday, I described a goal of mine: To pursue more signal, and less noise:

“Our subject is how to reduce the meaningless distractions in your portfolio (and your life). You want less of the annoying nonsense that interferes with your investing, and more of the meaty data that allows you to become a less distracted and more purposeful investor.”

Toward that end, I listed 10 ways to reduce the noise.

This morning, strictly as a thought experiment, I wondered what the process might look like if went another way: What would happen if you purposefully tried to assemble a “How-to” list to pursue the exact opposite goal — how to get more noise, and less signal?

In other words, what are the exactly wrong things to do as an investor? I took last week’s list, and updated it to be the anti-list:

How to Get More Noise & Less Signal

1. Mainstream media is an excellent source of actionable trading & investing ideas. Especially financial television (FinTV). You should uncritically consume even more of it.

2. Data is overrated. Go with anecdotes from people you know personally and your gut instincts;

3. Pundits and TV guests are there to help you reach a comfortable retirement. They have no other agendas.

4. The most important information about the stock market — especially about when to buy or sell — is known only to handful of insiders. Envy them (and blame your losses on not being in that circle).

5. You need to exert lots of energy, spend lots of time, and create lots of stress about the following: The Federal Reserve, the Dollar, Congress, Inflation, Sovereign Bank Debt in Europe, Peak Oil, China, Deflation, Austerity in the UK, and the Hindenburg Omen.

6. Don’t worry if you are not good at math or science; Empiricism and probability analysis are vastly overrated (they are for geeks anyway); WTF is mean reversion?

7. Focus on the news sources that are in sync with your own political views and opinions and investment postures. Do not read anything that challenges your pre-existing beliefs. Besides, analysts and websites and fund managers that have been wrong for years are due for a winner!

8. Short term trading is where its at! Don’t worry about the long term — its way off in the future. Measure your success in minutes and hours, not years and decades.

9. There is no reason that you cannot also have a good time with your retirement account; That’s what its there for anyway.

10. Never listen to those who people with good long temr track records who have had a losing trade or a bad quarter. Its all about recent performance!

That’s my list of 10.

What noise are you keeping in your life?

 

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