Bad news is — news is bad for us
Experimental investment group with less information outperformed better-informed group, writes Michel Pireu
James Montier was asked in an interview with Money Week what investors had to know before making an investment decision. "Wall Street would have you believe that you need to know everything about everything before you make an investment," he replied. "But in fact, to make an investment, what I need to know is relatively limited. I simply don’t need to know everything about everything. "There’s a classic belief that it’s necessarily better to have more information. The problem is that this ignores the fact that the human brain is a limited processing device…. We are not a crazed supercomputer that can handle bytes and bytes of information simultaneously. too much information confuses us.… So what we actually find is that the more information you give investors, the worse their decisions tend to be." Bob Frick, senior editor at Kiplinger, says while the wiring in our brains enjoys the stimulation, it processes a surfeit of information poorly. Frick quotes Daniel Simons, a cognitive ps...
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