Where to
Get Information About Investing

Introduction

Obtaining knowledge requires time – the most valuable commodity there is – which is why it’s important to know where to get information about investing.

Back in the day when investing started to become more common, there was not much information available for non-professional investors. And not that much for
professional investors either, mind you.

Obtaining even a little piece of new information was a considerable advantage over other investors.

Nowadays, if there is one thing that everyone has an endless supply of, it’s information.

We are bombarded with information through media practically everywhere we
go. This has created a new problem – the difficulty of choosing what information to consume and how.

To know how to handle the vast amount of available information, you must first categorize it.

Types of Information

The way I see it, there are two types of information: short-term and long-term.

Short-term Information 

When I talk about short-term information, I’m referring to the kind of information you see on daily basis about stock price movements and speculations about the market.

This is the kind of information that is made solely for selling purposes. The more obtrusive the headlines are, the better. Take a look at this headline from The Guardian:

“GLOBAL
MARKETS PLUNGE AS FED MULLS BIGGEST RATE RISE IN DECADES”

Now there’s an eye-opener and no mistake!

There’s nothing wrong with indulging yourself with some tasty clickbaits every now and then, as long as you don’t make them your number-one source of information.

The problem for long-term investors is when they begin to make decisions based on
short-term information.

Reading news and stock charts every day warps your perspective of time – short-term begins to feel like long-term.

For example, if a stock price declines for a week or two, you start to think there’s something wrong in the company itself that you don’t know about. You
begin to feel like you’ve made a wrong decision and start to question yourself.

If you focus on daily market movements, you’re in danger of losing sight of the big
picture.

Markets are not rational in the short term, which is why you should be. Don’t make hasty decisions based on irrational market movements. Focus on the big picture
instead.

Long-Term Information 

Considering the fact that I’m an advocate of rational, long-term investing, I’d suggest
that you also focus on long-term information.

What I mean by that is the kind of information that affects the fundamentals of the company you own.

For example, one bad quarter doesn’t mean anything in the long run, but the
reasons behind it might.

To find out what the reasons were and what are their consequences, you need to dig into the company’s financial reports, not news headlines. Reading financial statements is one of the essential skills every investor should have.

Now, I’m not saying you should avoid short-term information altogether. What I do
recommend is to limit the time you’re spending on it.

The time you spend skimming through headlines could be used more effectively by
focusing on what really matters.

The Main Sources of Long-Term Information 

Stocks

As I mentioned earlier, the best source of long-term information is companies’ quarterly and annual reports.

You should try to form a bigger picture of the reports. Aim to piece together a puzzle to see where the company has been, where it is going and how are they going to go
there.

You want to find out whether the company is gaining or losing market share, are the
products still what they used to be, has the company maintained its competitive
edge and so on.

One of the best sources of information is the CEO’s comments about the present and the future. If you want to make the most of them, compare the comments year-to-year and see whether they are consistent and reliable.

In addition to financial statements, you might want to check analyst reports. Analysts often have access to information that would take quite a while for an investor to dig up.

When reading analyses, it’s wise to take target prices and recommendations with a
grain of salt. Analysts usually operate in a time frame of 12 months, which is
to say that target prices and recommendations tend to change quite often.

The most valuable information in analyst reports is in the report itself, not in the
target price.

Investing Overall

I think the best way to get information about investing is plain-old books. As in
everything, I would first read a couple of classics and then advance to more
recent material.

Reading classics gives you a firm foundation on which to build. Moreover, if certain
books stand the test of time, they probably hold something worth knowing.

If you really wish to dive into the deep end, you can always purchase copies of economics and finance handbooks to study. Another great way to learn the basics is to sign up for online classes.

Nowadays, most of the information we obtain comes from different websites.

I would less surprisingly recommend informational sites like the one you’re reading
right now. Informational sites are (hopefully) managed by people who really
care about the subject and strive to publish high-quality information.

How to Manage Information

As I mentioned before, there’s a lot of noise out there. It’s important to separate
what’s useful and what’s not.

Make sure your information is in line with your investment plan. If you’re a long-term
investor, you don’t need to consume day-to-day information or speculate weekly
stock price movements.

Instead, you should be an avid reader of companies’ financial reports and different
independent analyses. 

Sometimes it requires quite a lot of discipline to focus on the best and the most
essential information. Useless information is always the most tempting kind.

It pays to limit the amount of information you expose yourself to. If you try to absorb
all available information, it’ll eventually work against you. Spend your time
wisely!

As a long-term investor, you should focus on the big picture, like the changes in
the companies’ fundamentals and the overall direction of a company’s industry.

Social Media Bias

This probably goes without saying but be critical of the information you
consume. Not all information is equal.

You should be especially mindful when browsing through social media platforms. Certain message boards and prone to bias because they attract like-minded people

For example, if you own a certain and find a social media forum about that stock,
the chances are that the people who write there also own the stock.

The problem is that it’s hard to stay objective as a crowd when everyone owns the same stock. You start to see a lot of rocket emojis and speculations about how stocks are going to the moon.

Now, I’m not saying that different social media forums are necessarily bad. They just
tend to be overly optimistic about the company in question because the same
people who contribute to the conversation also own the stock.

If you consume a lot of this type of content, try to keep objective by finding
opposite views and remember to also focus on the fundamentals.

Does Information Give You an Advantage?

Back in the day, having access to information at all was a huge advantage. It was a lot
easier to find opportunities that others had missed.

Nowadays it’s more than difficult to use the information to gain an edge, because
practically everyone has access to the same amount of information.

It’s next to impossible for a normal investor to gain an information edge in a larger company like Apple.

In smaller companies, on the other hand, there might be no analyst coverage and not much
information available besides the company’s financial reports. These are
the cases where it might be very profitable to dig deep.

Overall, information about companies rarely gives you an advantage over others, but it does give you an advantage over yourself. The more you know, the better off you are.

What gives you an edge is knowing more about the companies you own, the nature of the market and the benefits of long-term investing.

In the end, knowledge about investing and analyzing different companies is probably the most valuable capital an investor could have.

Summary

The challenge nowadays is not to find information, but to know what kind of
information you should focus on.

The type of information you should consume depends on your investment style. It’s important to understand what kind of an investor you are, to know which kind of
information you should be looking for.

If you are a long-term investor, you should seek long-term information.

Then again, if your investment strategy is based on short-term market sentiment, it’s the noisier news you might want to focus on.

Long-term information about stocks can be found in companies’ quarterly and annual reports.

The highest quality information about investing, in general, can be found in books and informational websites.

If you’re a beginner investor, you’ll get the most out of your time by focusing on the
classics.

No matter what source you’re using, you should always be critical of the information
presented.