Better Information, or Just More Information?

The year is almost over and as I prepared for this blog, I thought about a video I did last summer but never shared with you. The summer was so busy and volatile, I wanted to provide you with my current thoughts in such a tough time, so this video (which is one of my favorites) got pushed to the side.

The video is about information: more information doesn’t necessarily mean better information. I remember when having more publicly available information was a competitive advantage, but with free internet news sites with up to the second information, that advantage is not as clear.

Watch my video for my thoughts on More Information:

GWM- Video Transcript- More Information or Better Information

Hi Clients and Friends, Mike Brady here.

This week I’m going to talk about information; are you getting more information or better information? And that is a very key difference. You know I’ve mentioned in previous videos that this summer I’m going to talk about sort of the philosophy of investing and the art of investing. The reason, because, that’s the foundation, that’s the structure; I think it is absolutely essential.

There is a great study out there that I want to share with you about confidence and about accuracy as it relates to information. There were these book-makers, you know bookies, you know, with horses? They had to predict future horse races based on data, on past events. And so, these bookies were given five pieces of information, then they were given ten pieces, twenty pieces, then forty pieces of information, about you know, their weight, and the track; how they’ve done in different types of track; and how they’ve done in different weather conditions, whether it was hot, or cold, or wet, or dry, etc. And if they were given five pieces or forty pieces their accuracy, believe it or not, did not go up very much, I mean, just minimally, their accuracy. But what was remarkable, is that there confidence went up a lot. The more pieces of data they received, their confidence significantly increased whereas their accuracy did not.

In today’s world, we have so many pieces of data that we can look at and we have to discern which are the most important pieces to look at. And also, always check our confidence levels. You’ve heard me talk about this in the past. But, just because you’ve got more information does not necessarily mean that you’ve got better information. And in future videos I’m going to start talking about some of the information that I look at, so you’ll have to stay tuned in regards to that.

And if an investor or a manager is saying “you know what? I have an information edge,” frankly, I’ve come to a couple of conclusions. Number one, they’ve got insider trading knowledge. You know what, I’m uninterested in that. It’s against the law and that’s short-lived and you know what, that’s just not right in our particular day and age.

Number two, they are lying to themselves, or number three they’re lying to you. And you need to know about that. Twenty or thirty years ago having a good computer being able to get data feeds; I remember when I started out twenty years ago some of the data that we had, you could have a somewhat an information edge because you could spend a lot of money for various graphs and charts, etc., more than your common investor who couldn’t afford that. And you know what; all this data is pretty much free on the internet anymore and so that is not necessarily it.

So, the question is; are you getting more information or are you getting better information? And in future videos I’m going to talk about the information, the three or four pieces that I think are key in investing.

So, anyway, my name is Mike Brady; Generosity Wealth Management; 303.747.6455.

I have a thriving, growing business, I’m very proud of that, and so I would love to hear from you if you are not my client. Of course, if you are my client hopefully you are very pleased with our relationship and I do everything I can to have that deep relationship with you. 303.747.6455. I am a registered representative with Cambridge Investment Research, a wonderful broker dealer. And we’ll talk to you next week. Bye, bye now.

 

 

 

 

 

5 Worst Market Calls for 2011

5 Worst Market Calls for 2011

Even the best can make bad calls.

Warren Buffett buying Bank of America? Woops.

Bill Gross betting against Treasuries? Yikes.

John Corzine? John Paulson? Both very wrong in their market calls.

You’ve heard me over past 3 years talk about humility and diversification. My 21 years in the business has taught me that the investment, sector, stock, etc. that I absolutely love is still the one I need to calmly and rationally buy in an amount that I’m willing to be really wrong in and cut my losses quickly if necessary.

Even the best can make bad calls.

Click for Full Article

Aberrational Performance Taskforce

Aberrational Performance Taskforce

The Securities and Exchange Commission has a new computer system that allows them to siff out returns that are, well, too good to be true.

While it’s unclear exactly how it works, it compares published numbers from hedge funds with what the computer says is average or what the underlying assets could be worth.

If the numbers published are too generous, then the SEC is on the case! Click for more information

 Aberrational Performance Taskforce

Happy Post-Christmas!

Happy Post-Christmas!

Hopefully Santa was good to you, but just in case he didn’t give you the right accessory in order to look all Boulder, Gucci has fanny packs. Yes, that’s right, Gucci.

 

Oh, and that Star Trek Owners’ Manual I highlighted a few months ago? I totally got it from my brother-in-law. Geeks of the world unite!