Successful investing - soaking up information

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Continuing our series on how not to be your own worst enemy. This presentation looks at soaking up information when investing.

Transcript of Successful investing - soaking up information

  • 1. SuccessfulInvestingSoaking up information

2. Soaking up information 3. Introduction1. We are obsessed with learning more and more about less and less2. J Boorstin The greatest obstacle to discovery is not ignorance it is the illusion of knowledge. 4. Introduction Consider:o Book makers are as accurate predicting horse races with 5 pieces ofinformation as they are with 40 pieceso But they are 30% more confident when they have 40 pieces of informationo However, computers are more accurate with more information, six piecesof information 56% and as more comes in up 71% 5. Introduction Why?o Computers can soak in a great deal of information quickly and deliver amore positive outcomeo Humans have limited processing capacity i.e. we are not computers 6. So, information is crucial but whatis more crucial is to know whatinformation is crucialLets see how not to overburden ourselves.. 7. Soaking up information Generals in battle are surrounded by explosions, smoke, bloodand massive amounts of incoming information The key to the greats is the ability to see what is key, i.e. the vitaland critical information, and discard unnecessary information Key is to look for differences that make the most difference 8. Soaking up the rightinformationWarren Buffett I just try to buybusinesses with good to superbunderlying economics run by honestand able people and buy them atsensible prices. Thats all I am trying todo! 9. Soaking up the rightinformation In practical terms consider: o Valuation how does it compare to price seriously undervalued is what is what is being looked for o Balance sheet is the company strong o Capital discipline how does it spend its profits is it disciplined and does capital allocation shown consistent increases in share hold value 10. Soaking up information- summaryo To be successful we need to: Soak up the right information Focus on the fundamentals Ignore all the noise around us