I recently watched a video of a lecture that Tim McElvaine gave at The Ben Graham Centre for Value Investing at the Richard Ivey School of Business in Ontario. Tim now runs his own investment management company and worked for many years with the celebrated value investor Peter Cundill.
There are many lessons in Tim’s talk and it is worth watching. One simple but important point Tim made was the importance of filtering out financial porn. Buffett understood this many years ago when he located back to his home in Omaha in order to get away from people whispering stock ideas in his ear. Now, with the Internet, it takes more than going to a different location to get away from the financial porn that Wall Street spews worth.
Don’t get me wrong. The Internet is a transformational tool for an investor. The problem is the sheer quantity and quality of the information. Blogs, financial forums, RSS feeds, stock recommendations: the information flows like a mighty river. The problem with most of it is that it is an inch deep and a mile wide. No nutritional value.
As I have written before, good ideas cannot be produced according to the dictates of a publishing schedule. Pay close attention to the incentives of those publishing stock ideas. Only rarely do they remotely align with your own.
Big money is made the old fashioned way: by doing deep fundamental analysis that requires time and solitude to read and think. There are no short-cuts. We all need to find ways to filter out financial porn. There is some great stuff out there, but a lot of it – if not most of it – will not help you make money and become a better investor. Make it a point to plan your business/investing day around the things that really matter and then practice the discipline of sticking to your plan.