Avoid information overload when learning how to invest
Prior to online trading, the iPhone and the internet superhighway, the most common question I was asked by investors was how to find the best stocks to buy.
Interestingly, despite information moving at lightning speed these days, nothing has really changed given that I am still asked the same question today.
In the 1990s, investors would share how their biggest challenge was information overload, given that they were bombarded with newsletters, the media, brokers and other resources. Little did they know that the information tsunami was coming, because now it is infinitely worse.
As a consequence, investors have become even more confused resulting in many opting to invest in an Index Exchange Traded Fund to ease their confusion.
So how do you find the right stocks without having to trawl through loads of information?
In my experience, and some of the best advice I can give investors is that “less is more” and in today’s fast paced information flow, this is even more critical than it was 20 to 30 years ago.
Unfortunately, both investors and traders mistakenly believe that the more information they receive, the better their decisions will be with many checking stock prices on their mobile phone and buying and selling stocks multiple times a day.
In my opinion, this constant immersion in information leads investors to make reactive decisions based on emotion rather than logic.
I am pretty sure everyone has seen at least someone have an accident of some sort while they were walking and immersed in their mobile phone. This occurred because their attention was on the phone rather than the bigger picture of what was happening around them. The same can be said for the stock market, as it is very easy to get caught up in the moment when you don’t have structure around your investment decisions.
There are some simple strategies you can use to guide your way through the virtual mountain of information.
Therefore, the first thing I recommend all investors do is limit themselves to one or two very trusted sources of information and only look at this on the weekend when you have more time, you are relaxed and can absorb the information.
This will lower unnecessary stress levels, give you more time to focus on what is important, and will ensure you make rational rather than knee jerk reactions when reviewing any market news.
When the experts at Next Investors have a stock pick, it may pay to listen.
The Next Investors have been investing in ASX small cap stocks for years, with their best small cap picks yielding returns of 1,200%, 1,120%, 900% and 678%.
They have just revealed their hand-picked, FY2021 stock portfolio of high conviction long-term investments.
Click the link below to see what they are currently investing in.
S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.
Conflict of Interest Notice
S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.
The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.