|Question of the week:I want to learn to become a better investor, but I'm kind of overwhelmed by the amount of investing information out there. Can you recommend the best expert or publication? I'm especially interested in finding out which direction the market will be going. --K.R., Dallas|
Given the incredible deluge of financial information on the Internet, television and the newsstand, you can hardly help but be overwhelmed. But you need to realize that the media needs to sell headlines to stay in business, and that nothing sells headlines better than "investing noise"--claims about where the market is headed in the near term and which investments your must buy (or avoid).
This noise creates uncertainty, even fear, in some investors, prompting many of them to try to constantly chase a better return or find a better fund manager. This is the exact opposite of how a successful long-term investor behaves.
When we asked members of the Armchair Millionaire community about where they got their investing information and how they used it, we heard some nuggets of wisdom:
"Variety of sources, such as CNNfn, CNBC, CBS, ABC, Prudent Bear, newspaper, magazines, weekly finance publications, etc. Each has a perspective, and some have an axe to grind." --Alan and Kay
"I read a lot and subscribe to Business Week, Kiplinger's, and Fortune. I skim for ideas and seldom bite. My portfolio turnover is of the order of 5 percent a decade ... These sources are useful, with a lot of filtering." --Duke
I was at a recent investing seminar and the speaker, whose job it was to "wow" the crowd, said it best: "Don't accept forecasts. No one knows the future. Use only historically-proven investing methods."
The theme here? These smart investors recognize that there are many sources for investing ideas but no substitutes for using common sense. If someone tells you they know something that's going to happen in the future, you would do best to regard them with skepticism.
Rather than being a "noise investor," focus on becoming an "information investor"--someone who knows how the financial markets work, who uses a common sense, long-term investment strategy, and who doesn't chase the latest hot investment. My guide will help you filter out the noise as you journey towards becoming an information investor.
The Armchair Millionaire's Guide to Tuning Out the Noise
THE BOTTOM LINE: The reality is that there is no single expert or publication that will consistently provide you with an advantage when it comes to choosing particular investments or deciding when to invest. But the good news is that you don't need this kind of advantage to be a successful investor.