Lose the News
by Chris Mayer:
Most Common and Costly Investment Mistake
topic is the news. Specifically, how consuming it can
turn your brain into soft cheese and make you a lousy thinker and
I think the
message here is important and potentially life-changing.
Does it sound like I am exaggerating? Hang in there and keep reading.
You tell me what you think after youve read what Ive
for this is an essay by Rolf Dobelli, a Swiss entrepreneur, titled
Avoid News. Dobelli makes the case that news makes us
distracted, wastes time, kills deeper thinking, fills us with anxiety
and is toxic to our mental health. His analogy: News is to
the mind what sugar is to the body.
I shared the
essay with my wife Carol after I read it. It made an impact. Carol
offered to cancel her electronic subscription to The New York
Times if I would cancel my print subscriptions to The Wall
Street Journal and The Financial Times. (We already ditched
The Washington Post. I got tired of contributing to the salaries
of Steven Pearlstein and Ezra Klein, who must be the worst writers
on economics in America still getting paychecks.) Neither of us
watches TV news.
I had to think
about this offer. I love reading the newspapers every morning over
breakfast and tea. I also passed on the letter to a buddy of mine
who is in the business of advising institutional clients where to
put their money. Dobelli had him convinced too, and the next day,
he told me he left his WSJ and FT unread.
So what is
Dobelli saying? Let me hit some high points.
analogy with food is a good one. We know if you eat too much junk
food, it makes us fat and can cause us all kinds of health problems.
Dobelli makes a good case that the mind works the same way. News
is brightly colored candy for the mind.
News is systematically
misleading, reporting on the highly visible and ignoring the subtle
and deeper stories. It is made to grab our attention, not report
on the world. And thus, it gives us a false sense of how the world
works, masking the truer probabilities of events.
News is mostly
irrelevant. Dobelli says to think about the roughly 10,000 news
stories youve read or heard over the past year. How many helped
you make a better decision about something affecting your life?
This one hit home.
I wrote 58 emails to my subscribers under the Capital & Crisis
banner. I looked back and counted only five in which a news story
was front and center. Even then, I used the news more to make what
I was saying seem relevant and timely. But I couldve excised
the news and nothing wouldve been lost.
We get swamped
with news, but it is harder to filter out what is relevant
which gets me to another point that hit home. Dobelli talks about
the feeling of missing something. When traveling, I
sometimes have this feeling. But as he says, if something really
important happened, youd hear about it from your friends,
family, neighbors and/or co-workers. They also serve as your filter.
They wont tell you about the latest antics of Charlie Sheen
because they know you wont care.
is not important, but the threads that link stories and give understanding
are. Dobelli makes the case that reading news to understand
the world is worse than not reading anything. In markets,
I find this is true. The mainstream press has little understanding
of how markets work. They constantly report on trivia and make links
where none exist for the sake of a story, or just for the sake of
having something that makes sense.
reporters try to explain the market every day. The market
falls on Greek news is an example. Better to not read anything
if youre going to take this kind of play-by-play seriously
The fact is
we dont know why lots of things happen. We cant know
for sure why, exactly, things unfolded just as they did when they
did. As Dobelli writes, We dont know why the stock market
moves as it moves. Too many factors go into such shifts. Any journalist
who writes, The market moved because of X
your thinking if you accept the neat packages news provides for
why things happen. And Dobelli has all kinds of good stuff about
how consuming news makes you a shallow thinker and actually alters
the structure of your brain for the worse.
News is also
costly. As Dobelli points out, even checking the news for 15 minutes
three times a day adds up to more than five hours a week. For what?
He uses the example of the Mumbai terror attacks in 2008. If a billion
people spent one hour of their attention on the tragedy by either
reading about it in the news or watching it, youre talking
about 1 billion hours. Thats more than 100,000 years. Using
the global life expectancy of 66 years means the news consumed nearly
So what to
do? Dobelli recommends swearing off newspapers, TV news and websites
that provide news. Delete the news apps from your iPhone. No news
feeds to your inbox. Instead, read long-form journalism and books.
Dobelli likes magazines like Science and The New Yorker,
As an investor,
Id add some of mine own:
any news chatter that attempts to explain or predict what is happening
in the stock market
- Stop checking
your stock portfolio multiple times a day
try to find reasons for every dip and rise in the prices of your
stocks. Instead, accept that the vast majority of the time, nothing
the drumbeat of economic news. If you must read news, try a perusal
of the weekly Economist
especially, the drumbeat of economic data the unemployment
report, GDP, the trade balance and all the rest. As Peter Lynch
once wrote, If all the economists of the world were laid
end to end, it wouldnt be a bad thing.
- Read the
shareholder letters of successful investors. I like reading Steve
Romick at FPA, for instance. I also enjoy the shareholder letters
of the Third Avenue family of funds. There are many others. Read
any research such investment houses share
- Spend little
or no time trying to guess where you think the market and economy
will go. Instead, focus on finding good deals and winning teams
of entrepreneurs and investors that you can invest alongside
in on the conference calls of your favorite companies and investors
- Check the
stories and prices on your stocks once a quarter
- Read books
written by successful investors. Then read them again. Some of
my favorite authors include Martin Whitman, Seth Klarman, Peter
Lynch, Ralph Wanger, Benjamin Graham and Joel Greenblatt. Im
sure Im leaving a bunch out, but you can put together a
truly awesome library of successful investors for little money
that deepen your understanding of markets and how they work. Read
Louis Lowenstein and James Grant, for two of my favorites.
problem with the news is that it makes it seem as if important things
happen every day. The vast majority of the time, nothing of any
significance happens whatsoever which is good for you. If
you avoid a lot of the news, you will have a lot more time to dedicate
to other things. Feed your brain good food and youll get better
results. It seems that simple.
has sworn off the news. And he reports he feels much better for
it: less disruption, more time, less anxiety, deeper thinking
and more insights. I cant do the whole idea justice
here. If you want to read Dobelli, check
out the full essay here.
Print it out.
Turn off the smartphone. Stop checking email for 25 minutes. And
just read it. Be forewarned: It might just change your life.
Mayer is a veteran of the banking industry, specifically in the
area of corporate lending. A financial writer since 1998, Mr. Mayer's
essays have appeared in a wide variety of publications, from the
Mises.org Daily Article series to The Daily Reckoning. He
is the editor of Mayer's Special Situations and Capital and
Crisis formerly the Fleet Street Letter.
© 2012 Daily Reckoning