Why the Internet Makes Investing Harder, Not Easier

There’s an idea floating around in the world of investing that is leading many investors to poor financial decisions. Because of the Internet, there is a vast amount of information available today to the everyday investor that wasn’t available a few decades ago. Because all of this information is available, the argument goes, investing has become easier. The Internet has simplified investing. Is this claim true?

Let’s try an experiment. Go to https://www.google.com/. There, you will find the world’s most popular search engine, and the most powerful gateway known to mankind for finding anything you need to know. Endless knowledge at your fingertips. Now, type into the box, “advice for investors,” and click on the button that says, “Google Search.” At the top of the page, just below the menu bar and just above the ads, you will see a single phrase that sums up everything the article wishes to convey: “About 85,400,000 results.”

Now, your search might read something slightly different, depending on where you are and when you’re searching, but I’m betting that it’s still quite astounding. Now, try searching “financial advice.” 319,000,000 results. How about, “Which stocks should I invest in?” 39, 300,000 results. What’s my point? Here it is: no matter what you search for on the Internet, you’re going to get tens of millions of results, often conflicting, through which you will have to sort in order to find your answer. The Internet has not simplified investing; it has complicated it.

And Google is just the beginning. On top of search engines, there has arisen an entire new level of the Internet from which people are seeking answers to their questions: social media. Social networks like Facebook and Twitter add even more fuel to the fire. Do you remember the famous quote by President Abraham Lincoln? “The problem with quotes on the Internet,” said Lincoln, “is that it’s hard to confirm their authenticity.” Did you catch that? Abraham Lincoln–deceased for nearly 150 years–providing commentary on the Internet. Variations of this quote flooded Facebook for months, and the truth it discloses is brilliant. The fact is that a false claim can be spread so much easier and more convincingly today through the viral power of social media. If enough people “like” and “share” it, people assume it to be true–even if it’s Abraham Lincoln talking about the Internet.

What does all this mean for you as the investor? It means that it is harder than ever to discern the solid advice from the garbage. Everyone has always had an opinion about what you should do with your money. The difference is that, now, they are tweeting and blogging about it. More than ever, the truth is a needle in a haystack of clutter. Thanks to the world wide web, it is now harder to make investing decisions. There are simply too many opinions to sort through. More information is never as useful as good information.

If you need help navigating the world of investing through the endless stream of data now at your disposal, feel free to contact us for a free consultation. We would love to help you find the truth in all of this mess!