Posts filed under “Rules”

More Signal, Less Noise

Its Friday, the day I like to step back and get all Zen on y’all.

As promised yesterday, our subject this morning — indeed, over the past few months — 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.

This is a continual process. For me, finding moments of quiet contemplation to think things through is very important. Sometimes that means taking a walk through the woods, or sitting on a boat deck or merely relaxing in a hammock with no distractions. You may prefer meditation, jogging or yoga. Anything that allows you to get out of your self for a few is enough.

My daily process of waking before dawn and writing things down is an enormous aid to me figuring out what I think, to refining my understanding of what is really going on and why. I liken it to an editing process. I spend most of my quiet time deciding what to eliminate. After this process, whats left is almost all signal, no noise.

Here are some things you need to understand if you want to decrease the noise:

More Signal, Less Noise

1. News is Old — it is misnamed and not especially forward looking;

2. Data first and foremost; avoid the anecdotes and narratives;

3. Everyone talks their book (i.e., Whats their agenda?)

4. Recognize what financial chatter is merely idle gossip;

5. What is within your control? What is not?

6. Understand empiricism and probability analysis;

7. Eliminate all sources that are biased, or are not driven by your goals, or have a different agenda; (Delete money losers with Extreme Prejudice)

8. Understand the concept of time, and the long game

9. Separate what is for Fun and what is for Real

10. Refining your process is your goal. Get that right and the outcomes will improve naturally;

Your consistent focus should be to keep yourself concentrating on that which truly matters and learning to reduce or even better, ignore that which does not . . .

If there is interest, I might expand this into a full WaPo column.

 

 

Previously:
Things I Don’t Care About (January 15th, 2013)

What Do You Control? (May 30th, 2013)

Asking the Right Questions (July 18th, 2013)

The Price of Paying Attention (November 2012)

Who Do You Trust? (January 2008)

Lose the News (June 2005)

 

Category: Cognitive Foibles, Financial Press, Investing, Psychology, Rules

90% of Everything is Crap

Source: Mental Floss     As someone who has spent his fair share of time debunking nonsense, I love the elegant way Theodore Sturgeon trashed this anti-SciFi trope in the March 1958 issue of Venture: “I repeat Sturgeon’s Revelation, which was wrung out of me after twenty years of wearying defense of science fiction against…Read More

Category: Philosophy, Quantitative, Rules

Byron Wien’s 20 Rules of Investing & Life

Outstanding list from a man who has accumulated much wisdom over the years:   Lessons Learned in His First 80 Years 1. Concentrate on finding a big idea that will make an impact on the people you want to influence. The Ten Surprises, which I started doing in 1986, has been a defining product. People…Read More

Category: Investing, Rules

Are You Trying to Get Rich — Or Stay Rich?

Last week, Bloomberg caused a minor stir with their story on C/NET founder Halsey Minor (How Halsey Minor Blew Tech Fortune on Way to Bankruptcy): “How do you sell the technology company you founded for $1.8 billion and five years later file for personal bankruptcy? For Halsey Minor, it may have been a fascination with…Read More

Category: Rules, Wages & Income, Wealth Management

Random Thoughts: Comebacks, Intraday Reversals and the like

Since it is a Friday before a 3 day holiday weekend, it is a good time to kick back and think about what the recent market action might (or might not) mean. • Most Day-to-day market action is noise, There is very little signal involved, with the vast majority of commentary simply after-the-fact rationalizations of…Read More

Category: Investing, Markets, Psychology, Rules, Sentiment, Technical Analysis

Bernard Baruch: 10 Rules of Investing

“Being so skeptical about the usefulness of advice, I have been reluctant to lay down any ‘rules’ or guidelines on how to invest or speculate wisely. Still, there are a number of things I have learned from my own experience which might be worth listing for those who are able to muster the necessary self-discipline:…Read More

Category: Investing, Rules

Warren Buffett Investing Quotes

Given that its the Berkshire annual meeting this weekend, now is as good a time to roll out these quotes from Warren himself:   “To invest successfully, you need not understand beta, efficient markets, modern portfolio theory, option pricing or emerging markets. You may, in fact, be better off knowing nothing of these. That, of…Read More

Category: Investing, Rules

The Fine Art of Being Worng Wrong

  “We are in the business of making mistakes. The only difference between the winners and the losers is that the winners make small mistakes, while the losers make big mistakes.” -Ned Davis “More than anything else, what differentiates people who live up to their potential from those who don’t is a willingness to look…Read More

Category: Apprenticed Investor, Psychology, Rules, Trading

Sell Out: “The Other Side”

  Reader:  “Is it just me or has Barry Ritzholtz gone over to the other side. I see him guest hosting Bloomberg more so maybe it just goes with the territory….I’m dismayed and don’t like it when these guys sell out. Roger Lowenstein and his article on Bernanke….in Atlantic Monthly. Just venting………” Fleckenstein: Lowenstein, who…Read More

Category: Gold & Precious Metals, Psychology, Really, really bad calls, Rules

Sell Out: "The Other Side"

  Reader:  “Is it just me or has Barry Ritzholtz gone over to the other side. I see him guest hosting Bloomberg more so maybe it just goes with the territory….I’m dismayed and don’t like it when these guys sell out. Roger Lowenstein and his article on Bernanke….in Atlantic Monthly. Just venting………” Fleckenstein: Lowenstein, who…Read More

Category: Gold & Precious Metals, Psychology, Really, really bad calls, Rules