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?

 

?????

Category: Financial Press, Philosophy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “More Noise, Less Signal”

  1. [...] 10 ways to up the noise and reduce the signal. Wait, what?  (TBP) [...]

  2. romerjt says:

    Signal or Noise – tropical fish found further north than ever before . . . Gulf of Maine

    “Stellwagen Bank National Marine Sanctuary in Scituate Harbor, a research diving class from the Boston University Marine Program discovered something not commonly found in the area – three juvenile butterfly fish. Butterfly fish are small brightly colored fish often associated with coral reefs.”

  3. ByteMe says:

    #7 could be fleshed out a little with something about “life is a team sport and you need to support your team!”

    And for #3… my God, there are whole NETWORKS that are looking out for my comfortable retirement.

  4. [...] More Noise, Less Signal (Barry Ritholtz) [...]

  5. louiswi says:

    A superior post Barry!!!

    We shut the television completely off years ago and only use it now for R & R-classic movies via DVD. Nothing improved our life more than this simple move. Our investment results improved dramatically as well.
    Thus our motto: TV FREE IN 2-0-1-3!! It’s catching on around here.

  6. phoneranger says:

    Don’t forget portfolio analysis. Check it hourly. And focus on the stocks with the big pct gains or losses not the largest positions in your portfolio. Don’t forget a portfolio of lots of MoMo stocks is plenty diversified. But get some more anyway. And don’t forget to trade today because next week it’ll be too late.

  7. Bob A says:

    11. make sure you have twitter on your phone, tablet, pc aaaaand smartwatch, and check it every 60 seconds so you don’t miss Carl Icahn’s next tweet

  8. bear_in_mind says:

    Funny, about a year ago I was listening to Bloomberg media via the Downcast app and while the information was interesting, it all just began to sound like shills and barkers at a bazaar. I found I couldn’t keep-up with all the “great buys” and “under-appreciated trends” and on and on. So I stopped. Listening. Cold. It’s amazing how much better my INVESTING decisions have become.

  9. intlacct says:

    “Signal or Noise – tropical fish found further north than ever before . . . Gulf of Maine

    “Stellwagen Bank National Marine Sanctuary in Scituate Harbor, a research diving class from the Boston University Marine Program discovered something not commonly found in the area – three juvenile butterfly fish. Butterfly fish are small brightly colored fish often associated with coral reefs.””

    You say ‘global warming’ like it’s a bad thing. ;)

  10. [...] also expand on our earlier post of looking at what it would be like if we purposefully tried to get more noise in our daily media [...]