I had come across a very interesting perspective on news and news consumption. I am sharing it with you because it is relevant to the knowledge building process that is critical to becoming a better investor.
Today, you are going to find out whether you are a financial news junkie.
I got these definitions of junkie here.
1. a drug addict, especially one addicted to heroin.
2. a person with an insatiable craving for something: a chocolate junkie.
3. an enthusiastic follower; fan; devotee: a baseball junkie.
I am not going to discuss the first point for sure. Points 2 and 3 are more like it.
What does Rolf Dobelli say?
Rolf Dobelli, is the author of the book, “The Art of Thinking Clearly“. In a nutshell, Rolf’s message is to stay away from news.
Yes. Avoid news.
You don’t read your morning newspaper with your breakfast.
You don’t go online when you reach your workplace to check up on Google News or Times of India or the Hindu.
More relevant, if you are serious about becoming a better investor, never opening Moneycontrol or Business Standard or the financial news source of your choice.
Rolf Dobelli touches upon the reasons why news is bad. Sample this.
Instead of just reporting that the stock market declined (or increased) by 2%, TV news anchors proclaim, “The market declined by 2% because of X.” This X could be a bank profit forecast, fear about the Euro, non-farm payroll statistics, a Fed decision, a terrorist attack in Madrid, a subway strike in New York, a handshake between two presidents, anything, really.
This point is true if you think of it.
I rarely watch financial news on TV. I have also been perplexed about the crystal clear clarity of news anchors when it comes to understanding cause and effect.
You really should read the rest of his piece. It is a relatively short read. This piece is very engaging and thought-provoking.
Rolf Dobelli – Avoid News
What can you apply from Rolf Dobelli’s Avoid News piece to investing?
I think that Rolf makes some pretty interesting and bold points in his Avoid News piece. He advocates going completely off news. I would not subscribe to that view.
But, I do agree to a large extent that too much news reading is bad. This holds for financial news too if you want to learn more about businesses or a particular sector.
News sources have become hyperactive after they have moved online. With a physical newspaper you still could not spend too much time beyond a point.
Now, in the online world, you can be a news junkie very easily. Hyperlinks can take you too far away very soon. You started of reading about a financial result and 10 minutes later you are reading cricket score updates.
And precious time flies by.
The second case is where you read information on an area of interest over time. A snippet read today. A snippet read after 10 days.
I really don’t know how much of the information read in such a manner is captured successfully by our brain in a manner that is useful later.
I for one prefer reading a 4-5 pager article in Forbes or an Outlook Business where a company is discussed at length rather than reading a small snippet somewhere that says they have sold ‘x’ units more in the last month than the previous month.
Longer articles definitely give you a wholesome picture. Daily news is not too good at that.
And frankly over the long term, for a business, there are bigger factors that are at play as compared to the RBI dropping interest rates or the Consumer Price Index (CPI) trending higher or the US Fed’s next move.
How can you avoid being a financial news junkie?
The first thing is to honestly appraise your daily financial news consumption habits. If you are working in a financial services sector job you may be required to be familiar with daily news.
For most others, this is hardly the case.
Are you spending too much time on isolated pieces on financial news portals like Moneycontrol?
Are you randomly clicking on articles without purpose?
If yes, cease this behaviour for a week.
Try reading only headlines of articles. I use Business Standard online. I pick and choose. I don’t read the newspaper end to end.
Try reading a detailed research report on a company.
If you have never read an annual report of a company, go to the company website of your choice and download one. Read it end to end. Mark what you don’t understand. Use the Internet to learn.
For stocks of companies which are retail focused, try going to the market and find out how certain products or services are doing. I had shared my findings for Cera Sanitaryware recently. All of us can carry out what was called as “scuttlebutt” by Phil Fisher, author of Common Stocks and Uncommon Profits.
That brings me to books. If you have not read a few good investing books, buy and read them instead of reading news. They definitely will give structure to your thoughts. I have shared a list of books on the Investing Resources page that I found useful.
Start reading good business magazines.
See if you are able to utilize your time better this way. It will take some time to break old habits. But I feel it will help you in the long-run.
What about the stocks or investments you own or are tracking?
I am not advocating stopping news completely. You surely need to be abreast of developments relating to stocks where you are invested or tracking closely.
Have you checked whether you can put alerts in the news portal that you use so that you do not miss any update related to a particular company?
Try Moneycontrol alerts.
Try Google Alerts.
Both are free.
Let me know your thoughts
I have cut financial news down in the past and have benefited from reading things of interest in a more structured manner.
Do you agree or disagree?
Were you a financial news junkie ever? How did you change?
Are you still a financial news junkie? Do you want to change?