Information Overload Leads us into Some Quite Nasty Investing Behaviours

An excellent essay, The Curse of Seven, via the Psy-Fi Blog.

Excerpt:

Investing Overload

Information overload leads us into some quite nasty investing behaviours: we ignore parts of the data presented, we favour recent, vivid and easily available information over other types and gravitate towards well presented arguments, even if they’re spurious, as described here by Thomas Moellers. Basically, the idea that more information is better than less when it comes to stock analysis is wrong, unless you have a well-honed mental model and proper support tools. One of the simpler ways is to build a checklist of items that you need to cross-check: the valuation fundamentals that you’re interested in, the competitive position, the previous track record of the directors, or whatever.