Consuming finance news without being consumed

Wall Street Journal personal finance columnist Jason Zweig writes on his personal blog about how some readers become consumed with financial news, hurting their decision marking.

Zweig writes, “It can’t be coincidence that online brokerage sites have prominently featured news feeds since the 1990s. The faster the news streams in and the closer the attention you pay to it, the more likely you are to trade on it more often — certainly profiting the online brokerage, but probably making yourself poorer.

“Financial journalism is in the change business: focusing on whatever has just changed, and focusing most intently on whatever has just changed the most and the fastest. If you are a trader, change is just about the only thing that matters: Your results come from properly anticipating short-term change. But if you are an investor, change is likely to matter very little: Your results should come not from anticipating changes in the financial markets, but from avoiding changes in your own plan.

“As a result, being an intelligent consumer of financial news is harder than it sounds. You must remain well-informed, but you must also resist the temptation to respond to every twitch and tic the markets make. That temptation can become overpowering during market crashes, when you will feel you have no control over the chaos and almost any noise in the data will feel like a ‘trend.'”

Read more here.