New Investor: Stop Reading News
Investing can be an overwhelming field, requiring years of experience and practice to navigate successfully. With the rise of the internet and the 24/7 news cycle, there is a seemingly endless supply of financial news and opinions available at our fingertips. It’s easy to fall into the trap of assuming that reading the news will help us become better investors, but in reality, relying solely on financial news can do more harm than good.
Jargon
One of the main reasons why reading the financial news won’t make you a better investor at first is that articles are often written using specific jargon. As such, the financial news is often filled with technical terminology that can be overwhelming and confusing for new investors: take for instance the word “capital”; it has multiple meanings depending on its context. Additionally, financial news can be biased and often promote specific investment strategies and agendas and without the right training you may be subject to manipulation.
Short-term Horizon
Furthermore, financial news is often focused on short-term events and trends, rather than long-term investment strategies. This approach can create a sense of urgency among investors, leading them to make hasty decisions that may not align with their long-term financial goals. It’s important to remember, as Charlie Munger puts it, that investing is a long-term game and requires a solid temperament to achieve financial goals.
Timeless Books
On the other hand, timeless books on investing provide in-depth knowledge and insights into various investment philosophies. The authors of these books have years of professional practice behind their writing, meaning that the information contained within them has been tested and proven to be effective. Investing books require a different level of engagement and will equip you with the right mental models to read between the lines. A well-written book is an ongoing dialogue between the reader and the author, requiring deep analysis and thinking.
By reading timeless books on investing, you don’t only gain a solid understanding of the different investment processes, but you also develop the critical thinking skills needed to analyze articles effectively. You learn to identify bias and detect common logical fallacies.
Finally, while reading financial news can be helpful to stay up-to-date with news, it’s essential to approach it with a critical eye and not rely on it solely to inform your investment decisions. To become a better investor, it’s best to focus on timeless books that have stood the test of time. These books provide in-depth insights and strategies that cannot be found in news articles, and they also help develop the skills needed to analyze financial news effectively.
