One of the problems people grapple with when trying to educate themselves about money and investing is information overload.
You have talking heads on local and international business channels rapping about this or that market, every minute of the day. You have ‘experts’ on twitter pontificating. You have tens of books you intend to read. You have the abyss that is the internet with millions of blogs, podcasts, channels, apps et cetera all loaded with gigabytes upon gigabytes of information, much of which is in jargon that sounds like some alien speak.
It is easy to be overwhelmed, particularly when you know newer information is being belched out of the markets every single second.
How do we make sense of it all, or at least enough of it that we keep a healthy distance from financial illiteracy? How do we learn enough to come up with an investing philosophy?
At a basic level, it’s worth knowing that not all information is worth knowing. This is especially useful when it comes to business television, which I consider the junk food of financial information. Business television has the capacity to mesmerize with physically attractive, fast-talking, sharply articulate, buzzword bearing presenters. But it’s hard to argue that a media house can perpetually churn out useful information, round the clock. Just a teensy bit of the broadcasting is information you need to know, much less care about.
When I started having an interest in the market, I used to hang on every word the pundits on TV said. Thankfully, I realized in time that half of it is just them ascribing spurious reasons to mostly random market moves. The other half is them making forecasts about stuff that’s already baked into prices, hence rendering it of limited use in profitable investing.
All this to say, use financial television to simply keep a tab on the markets and possibly for entertainment. You are not going to watch Bloomberg for a couple of days and become an investing whiz.
When it comes to the internet and social media, the best places to learn from are the ones that are not trying to sell you anything. The ones that are unaffiliated. If you follow a financial analyst who is obviously pushing a product, or one whom you suspect is paid to retweet a certain firm’s stories, for example, you better have a sack of salt with you. Because you should be taking whatever they say with shovels of it.
The same treatment applies to deposit-taking institutions and investment firms that hold training sessions on investing. It is alright to attend and some of the material shared is great. But expect neither impartiality nor objectivity. Many such “training” inevitably degenerate into marketing sprees. There is a thin line between soberly educating someone about a product and getting them manically interested in the product.
What about books?
It’s advisable to exercise discretion when it comes to books. Suppose you want to self-educate on personal finance, and you intend to read two classics: The Richest Man in Babylon by George S. Clason and Rich Dad, Poor Dad by Robert Kiyosaki. Unless you already had some foundational knowledge, I can promise you will feel even more lost and confused when you are done with the texts.
Of course, it’s best to read as widely as possible from a diverse set of authors with varying ideas and contrasting opinions and distilling useful ideas from each. But people have things to do and not everybody has enough time for this sort of trial and error, at least not when it applies to the knowledge you want to gain and use quickly to improve your odds of successful investing.
Evidently, this subject is so wide and going after it without some pointers can easily feel like a wild goose chase. So, I am going to do something I’m often too careful about – offer recommendations. Below is a list of people in various facets of finance who have immensely shaped my investing knowledge and philosophy, which as you might guess from earlier articles is quite conservative.
Howard Marks – Risk, market cycles, investing psychology
Howard Marks is an investor and author. He is the co-chairman of Oaktree, the largest distressed debt fund worldwide. In addition to his books, he is renowned for his regular, deeply thought out – and often funny- memos he writes to Oaktree’s investors. The memos, from as far back as 1990, are accessible free of charge on his firm’s website. Each memo is packed with wisdom, analysis and candour. Warren Buffett himself said he is always looking forward to Howard’s memos, as there is always something to learn.
Aswath Damodaran – Valuation, corporate finance
Aswath Damodaran teaches valuation at NYU’s Stern School of Business. He is adoringly known in the finance community as the Dean of Valuation. Aswath is the author of numerous books, but the resource I find most helpful is his YouTube channel, where he posts recorded lectures. He also compiles essential valuation data like credit spreads and risk-free rates. His lectures are highly engaging and easy to follow. You will learn more about valuation from a few of his videos than you probably learnt from your entire college course.
Warren Buffett – Investing psychology, life, stocks
Need I say anything about Warren Buffet? Read, watch, listen to anything by the oracle of Omaha. Not only will you become a better investor, but there is also a good chance you will end up a better person.
Dave Ramsey – Personal finance, life.
Dave Ramsey gets a lot of flak for what many see as radical financial conservatism and for his offhand, take-no-prisoners demeanour. A lot of people also question his objectivity given that his company actively sells personal finance products as well as ad slots to “sponsors” on his shows. But I have followed Dave Ramsey for years and never had to buy a thing from him or his advertisers. Instead, I can directly credit him with the clarity that has shone into my personal finance life over the past several years and I am sure millions of people feel the same way. He has written some books and has a YouTube channel which is both loved and loathed in equal measure.