Blogs, podcasts, videos, books, webinars, articles, newspapers …the amount of financial commentary published these days is staggering.
The volume of news and analysis could be cut by 90% and it would still be completely overwhelming.
So how do you make use of it all?
As a property commentator who spends an embarrassing amount of time sifting through the news, here are a few things I've learned over the years.
1. Read things you know you're going to disagree with
Since Google is keen to take you down a rabbit warren where you’ll only find more content as you’ve already read, this makes you vulnerable to something called “confirmation bias.”
This is when you start with an answer and then dig for information that backs it up.
This is really dangerous because once you find someone else who agrees with you, you become more convinced that you are right.
But think about it…it’s not really hard to find someone who agrees with you about virtually anything.
I see this all the time when inexperienced investors find a property they “love” and then work backwards looking for data to confirm the (emotional) decision they’ve already made.
To prevent you from being a victim of confirmation bias I suggest you look for counterarguments to things like the investment strategy you’re planning to employ.
Now you don't have to go overboard with this, but whenever you're convinced of a trend or a theory, go out of your way to read the counterargument.
At worst, you’ll continue along the path you were heading. At best you gain a perspective you'd never thought of before.
- Also read:The latest Corelogic Rental Market Report
- Also read:The Boom and Bust of our Property Cycles: A Journey Through the Investor’s Mind
- Also read:Perth housing market update | April 2024
- Also read:Latest property price forecasts for 2024 revealed. What’s ahead in our housing markets in the next year or two?
- Also read:Sydney housing market update | April 2024
2. Read old news
If you spent some time reading last year’s news one thing you’d learn from history is that we don’t learn from history.
Read enough old news and you quickly realise three things:
- The real value in those articles which are forecasting the future of our property markets or the economy comes months or years after they are published when you see how hopelessly inaccurate they were.
- The majority of predictions never come close to being true. Just look at all those forecasts of our real estate markets collapsing made a year ago.
- Most of what we think is important news at the time are really trivial in the long term. Sure these short-term influences seem important at the time, but it’s really the solid fundamentals and long-term trends you should be focussing on.
Once you realise this, you react differently to today's news.
You may even be completely cured of following the financial news.
Note: Read fewer forecasts and more history. Study more failures and fewer successes. Read more books and fewer articles.
A big takeaway from economic history is that the past wasn’t as good as you remember, the present isn’t as bad as you think, and the future will be better than you anticipate.
3. It’s not the media’s job to educate you.
While professional journalists will always try to be accurate, I’ve found that when it comes to the fields of economy, finance and property many of the journalists really lack perspective which leads to them easily being influenced by media releases from “want to be experts” chasing a headline.
Then they have deadlines, quotas and the need to get eyeballs on their articles as their organisations have already sold this space and this makes them susceptible to turning non-news into something that sounds really important.
Note: Imagine how much stuff you'd have to make up if you were forced to talk 24/7. Remember this when watching financial news on TV.
4. Don't think every news story is actionable
While there are thousands of news articles, blogs, podcasts and videos published every day; very, very few of them should ever compel you into action.
Most financial news should, at best, be treated as something that incrementally helps you understand the big picture.
If you find yourself tempted to take action after reading the news, do your future self a favour and read less of it.
Note: Read last year's market predictions and you'll never again take this year's predictions seriously.
