Each day we are constantly assessing the risk in the global market – whether it be Europe and the problems with one of their struggling members, or China with their dodgy economic data or bad loans. Alternatively, it could be the US with the issues around the unwinding of QE debt levels, or even Japan with the QE that is soaring to infinity and beyond and trying to determine where this will end up. There always seems to be something in the news!
Over the decades, I have often found when you pick up and read the papers there has never been a day where their is no bad news to report. In fact to some degree, I look forward to one day that I open the Wall Street Journal or the Financial Review and it says on the front page….
“Nothing to report. All is well in the world enjoy your day!”
That would definitely save me 3 hours of reading time each day!!
Back in 1815, Nathan Rothschild was reported to have made a fortune betting on the market on the back of the Battle of Waterloo. His main strategic advantage in making this fortune was having a courier network which was established to provide him with the information before it was publicly known. Back then there was a strategic advantage of speed and availability of information.
In fact, you don’t have to go back all that far in time when most people waited for tomorrows news papers for the latest share prices. If you wanted the share price in a hurry, you had to call a broker or buy a pager which sent you updated prices.
However today the world is very different. There is no shortage of information and news and the speed at which you can obtain this information now seems infinite. In fact, today I think the problem is not so much getting the information, it is the fatigue which might come from information overload.
Unlike back in 1815 when having the information quickly was the key advantage, today I think the key advantage is the assessment of the information. The importance of determining if it is just “nice to read” news, or if it is an action point and requiring further investigation. This is the skill in todays world.
Sometimes it seems we spend a lot of timing ensuring a non-event in our eyes does not become an event.
Despite these changes in the global and local landscape however, I think it is important to recognise that investing according to just global marco economic indicators is a difficult recipe alone as each country often has their own problems.
There is no shortage of success stories which often go unreported with listed companies that continue to do well even in difficult economic times as well as the prosperous. It is important to sometimes not be distracted about the headlines and but spend the time burrowing down to discover these important investment options.
So next time there is a screaming headline (which just might be tomorrow) think to yourself what might be the probability of this really becoming a problem or will this just become yesterdays news when tomorrow arrives?
Like all great investing ideas it is important to seek professional guidance, and we would always recommend our friendly team at AJ Financial Planning.