Ask Colin

There is a huge volume of information available on the markets. What is essential and what is not?

This is a bit like the question "how long is a piece of string?" It all depends on so many things. It betrays a common impulse to simplify - often without knowing the benefit of thinking through everything. My experience is the more information we consider, the more ideas we test and the more we broaden and deepen our knowledge, the better we become as investors.

However, primarily it depends on your investment plan.

Take for example the list of 20 most active stocks each day. If you are a momentum investor, this will probably be essential information. However, if you are a value investor, it will not only be irrelevant, it might be psychological poison to your approach.

What I have done over the years is to first soak up everything I can until I start to see it all in perspective. Then, for each piece of information I ask "how will this help me in my investment plan?" The key point is that every piece of information adds in some way to our picture of the markets - what is useful, what is not and the wisdom that comes from knowing why.

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