How More Information Can Actually Hurt You

In the past, we’ve written about the danger of seeking out too much information. The more information you have, the more choices you have to make. When you are forced to make too many decisions, you can become overwhelmed–and you may end up making poor decisions out of frustration. In the world of investing, this can have dramatic consequences on the shape of your portfolio. So, for this reason alone, obsessing over every ebb and flow of the stock market is usually a bad idea.

Beyond that more concrete reason, though, there is another reason to be a little bit more selective about the information you choose to take in. Too much information can affect your decision-making ability, but it can also affect your emotional health. When we take in every single detail of a situation, it is likely to cause anxiety. When worry gets under your skin, it can lead to large problems all across the spectrum–not just with investing, but with family life, social life, and spiritual life. Whatever you care about, anxiety can destroy it.

Most of us want to live in a clean environment. We like to eat off of clean dishes, we like to sleep on clean sheets, and we like to wear clean clothes. When these things are dirty, we wash them. However, imagine what it would be like if you could actually see every germ in your house. No matter how thoroughly you clean your home, you can’t kill everything. There will likely be an alarming amount of bacteria remaining on your dishes, sheets, and clothes–even after you’ve washed them. Do you really want the stress and burden of seeking out every germ in your household and eliminating it before getting on with your life? It would probably be impossible!

Here’s the thing: we don’t need to cleanse everything around us to a 100% threshold, because our bodies have immune systems capable of dealing with the germs we fail to eradicate. In the world of investing, you could say something similar. We may not be able to get every little piece of information to help us make decisions about our portfolios, but the market is self-correcting such that wild ebbs and flows will eventually reach an equilibrium. We don’t need to worry about fluctuations; the market will always bounce back.

For investors, the important thing to focus on is the big picture. Where is the market headed in the long-term, and what are our lifelong goals? What happens on a daily basis to our portfolios or to the market as a whole is of little consequence. Worrying too much about the minutiae will only cause us undue stress that seeps into every facet of our lives and destroys us. Great investors always see the big picture. If you need help understanding what to focus on and what to ignore, feel free to reach out to us for a complimentary consultation. We want to help you clear the anxiety out of your investing strategy to help you focus on what matters for your life and your future.