Q&A: The Price of Paying Attention

Kent Thune recently asked me a few questions about The price of paying attention. He used a portions of my answers in his column, but much of what I wrote was off topic.

Never wanting to waste anything once written, here are those thoughts on Research, Media, Information Sources et. al. :


1. How much time do you spend each day searching for and consuming information?

Less and less – I probably spend more time looking at curated material and less outright searching than I used to.

Twitter has become the new tape. I am constantly discovering new voices there. I do find myself looking for new sources, but that is not the focus of my process.

Rather, I seem to be hunting for excuses to eliminate bad, unreliable or biased sources. Investors have this cognitive bias that “more information” helps they make better informed decisions. It turns out not to be true; more information helps them be more emotionally comfortable with their decision making – over confident in fact. Paradoxically, more info leads to overconfidence and WORSE decision making.


2. How do you choose your information sources? Is this process similar to building a portfolio of investments?

Process is important. I want to know that there is a method to the madness of the person I am reading. Sure, track record matters, but I need to see a justifiable rational process that is not based on luck or randomness.
These days, I seem to be reading people rather than organizations. For example, Dan Gross is at Daily Beast – I will read him anywhere, even at a site (like the Daily Beast) filled with biased and corrupt writers I detest. I’ve read Jesse Eisinger at TSCM, WSJ, Portfolio and now Pro Publica – where ever he goes, I am a reader. And James Montier used to be at Dresdner Kleinwort, now he’s at GMO. So it’s the person, not the organization that matters most to me.

I try to eliminate people with bias or a terrible track record or who have to crank out content – give me any excuse to remove one more source of bad or mis-information and I am happy to do so. The perma-bulls and perma-bears are easy targets; the harder ones are the bad judgment or poor process.

For example, Kevin Hasset is one of the authors of Dow 36,000. That’s a fatal money losing horror show of awful judgment AND terrible timing. He is henceforth quarantined as a source for anything ever again. I cannot afford to let anything he writes influence. Ben Stein is another guy who simply murdered his readers financially. There are tons of other examples – people who denied the 2007-09 recession as late as October 2008, rewriters of history. They are too expensive, too costly, to allow them to influence my thoughts.

Every now and again, I have to sequester a writer I like. Perfect example: Look at Andrew Sullivan, who is a compelling and interesting author. I used to read him all the time. Even worse, he is a powerful and persuasive writer, making him all the more believable, and therefor dangerous. But his judgment was so god-awful about the Iraq war, that I simply quarantined him as a deadly infection, never to be trusted again. Guys like him are a curse to anyone who run money.


3. Have you noticed a proliferation of amateurism and incompetence in financial media in recent years? If so, which media type (i.e. web, print, cable, etc) has deteriorated the most?

Television News is just awful, cable especially. We switched off the TVs in the office about 5 years ago and never looked back. CNN is mostly idiotic, Fox News actually makes you uninformed + filled with wrong info, and CNBC has turned into this money-losing shout fest.

“Lose the News” was a column I wrote in 2005, and its more apt than ever (here)

The WSJ, once the greatest paper in the world, has lost a good chunk of credibility in my eyes since Murdoch took it over. The reason is his blatant bias – anything with a remotely political relevance is now 100% untrustworthy. Its still an excellent news source for me, but so long as he owns it, there is an asterisk attached to every article. MAY BE EDITED FOR POLITICAL REASONS. Forget the phone hacking scandal, that old bastard should go to jail for what he did to the paper. I hope NWS Corp spins it out so it can go back to being the best paper in America.


4. What is “chart porn” and why do you believe it is an apt term?

The website Chartporn.com credits me with coining the term some years ago, but I have no idea what I was thinking – other than gratuitous, hot sweaty charts of steamy market action and beautiful economic data are so wonderfully informative.

If a picture if worth a 1000 words, a well-crafted chart is worth 10 times that.


5. What cautions and advice can you offer traders with regard to their information consumption? Is there a diminishing return of information (i.e. more is less)?

Why are you consuming content? Are you looking to confirm a previously held belief? (Confirmation bias). Are you looking for additional information to make you feel good about your decisions? (Overconfidence bias)
Have a methodology that is not dependent upon finding some tiny piece of hidden info. That is not a repeatable process.


6. At The Big Picture, you don’t use SEO strategies or button-pressing headlines, such as “3 Reasons to Buy Gold Now.” Has this honest and often irreverent approach to financial news attributed to your success as a blogger?

Daniel Boorstin, the former librarian of Congress, once said “I write to discover what I think.” There is a lot of wisdom in that.

My writing is a way I manage to take all of the related but disparate thoughts across a variety of disciplines and organize them.

Here is a little secret: I write for me, not the reader. If that sounds odd, or anti-social, or even selfish, well, its all 3 of those things. But that’s why its very honest and perhaps why some people find it helpful. I am always seeking the Truth, trying to discern what is reality. There is enough bullshit in the world, who needs another SEO driven, hyped up headline content farm?


7. How important is intuition for the trader and how might information consumption affect it?

I don’t know, but I suspect intuition is wildly over-rated. Is it consistent reliable repeatable? If intuition was all that important than newbie traders with good intuition would be able to sit down at a desk and making a killing.

That does not seem to ever happen.

I suspect the best traders learn to internalize lots of what they have learned over time, and what appears to be intuition is really the result of 1000s of hours of hard work, research, practice, experience.


Thanks again, Barry.

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