Look before you leap - The Hyperion Effect

With it being year end and many people making the annual year end flurry of contributions we thought that we should look at some of the things investors should be doing before they make decisions on where they invest. The first, and salaciously titled ‘Seperating Investment Advice from Financial Pornography’, article looks at the difference between good quality advice that is very often buried in financial journals with that which is more often designed to generate a headline for the mainstream media. His message is that Separating investment advice from financial pornography is the critical first step towards intelligent and responsible investing.

In a piece from The Motley Fool titled ‘Things Investors Should Read. Things Investors Should Avoid.’ The author, through the clever use of a photo of Warren Buffet in his office points out that Warren has “created more than a quarter-trillion dollars of value for Berkshire shareholders from this desk (it doesn’t even have a computer on it) over the last 50 years. And he did it while rejecting most of the “tools” investors utilize. We can all learn something from that”.  The article also has three great points for investors to consider when they are reading information on the markets.

  1.  Avoid explanations of random events. Pay more attention to historical context.
  2. Avoid breaking news. Pay more attention to broad trends.
  3. Avoid strong opinions. Pay more attention to people who talk about their mistakes.

It’s an interesting way to approach the stream of information that is almost constantly at our fingertips and the examples provided provide excellent context of real world application.

We have previously written on this subject including this collection of articles over the past 18 months that looks at why paying to much attention to the media and the short term headline can be a danger to your long term strategy.

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