News and Media

How to overcome investor information overload

A massive increase in economic and financial information is adding to investor jitters. Find out why and how to overcome information overload.

In his latest newsletter, AMP Chief Economist, Shane Oliver, is arguing that the communications revolution is making things seem a whole lot worse than they really are.

'We are now bombarded by economic and financial news on a continuous basis. Whether it's on the TV via regular finance updates, numerous news and finance channels, websites and blogs, twitter on a smart phone, it's hard to escape,' said Oliver.

'The trouble is much of this is noise - random moves in economic data more due to statistical aberrations than fundamental swings in the economy, second order economic data of no real significance, gyrations in share prices and currencies that reflect swings in sentiment on the day, and in Australia's case, constant chatter about interest rates.'

Oliver added that the constant information bombardment is, 'likely making investors excessively cautious, which means they are less likely to take risks which will ultimately mean lower long-term returns'.

Instead, he suggests that investors should consider turning down the "news" volume, refocus on investing for the long-term, and remember that the best time to invest is when everyone is gloomy.

Oliver concluded, 'In other words, follow the advice of Warren Buffet when he said, "Get greedy when everyone panics, panic when everyone gets greedy".'

Source: Your Investment Property. http://www.yipmag.com.au/news/5599/default.aspx. 8 July 2011. Reproduced with permission.