Are you consuming investing disadvantages?
How financial news can be an edge or a risk.
Hi friend,
When you read financial news, do you make the mistake of assuming it is relevant to you?
How do you know?
Are the news playing to your advantages or disadvantages?
And what is the right way to gain from this new knowledge that is hopefully fact-based and not speculative?
Want to beat the markets in any condition? Learn Mixed Active Investing here.
Financial news has spawned from the traditional news methods and they suffer from creating this hamster wheel of FOMO (Fear Of Missing Out).
It is rare to find mainstream financial news that doesn’t come with a tone of trying to get you to take some form of action. Either the pundit directly opines on how a situation should be handled or it is implicit in the attempt to create outrage for more clicks.
The best financial news resources I find are newsletters from fund managers because their incentive is to show they know what they are doing. Not to make a living from writing or driving a community.
If you are a day trader or close the news might be relevant for your strategy but be careful about how it affects your emotions.
Your emotions and mental state affect your decision-making.
Because of that try to stick to reports from sources that match your investing philosophy and strategy.
We are what we consume. If you read a lot of material related to a certain strategy over time your decision-making will skew you towards adopting a similar strategy.
What if that strategy is not aligned with your knowledge, execution skills, and time available?
The most important thing you can do when you invest actively is to identify your strengths and weaknesses.
Your strengths are often called your edge. Less importance is given to weaknesses.
Your weaknesses are what will bite you and make your edge less effective.
Don’t try to make up for your weaknesses by improving those areas. This is usually futile. Instead, manage them by managing the risk they expose you to.
Then you can focus on doubling down on your advantages.
When you consume financial media try to identify the investing context of the person recommending and opining.
If it matches yours, you found an advantage.
If it doesn’t, beware of a potential hidden disadvantage that will reflect on your portfolio performance.
What are your main information sources for investing and what is your investing strategy? If you have doubts about mismatches feel free to share and I’ll see if I have suggestions you can think about.
Have fun and make profits,
Chris
Thank you for reading! :)
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DISCLAIMER: None of this is financial advice. This letter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
