Tips For Digesting Financial Information

Aug. 21, 2016 8:09 AM ET6 Comments
John P. Reese profile picture
John P. Reese
2.07K Followers

Portfolio managers are bombarded with financial information and must become adept at sifting out what is useful. In a recent Enterprising Investor article, Robert Martorana, CFA, offers some tips on how to accomplish this daunting task:

  • Focus on the future, not on the past: Most content that focuses on past results "has little chance of leading to better results."
  • Fact vs. fiction: When "confronted with the hype and sensationalism now masquerading as news," it is increasingly important to quickly identify "nonsense" and move on.
  • Ask yourself three questions regarding the information you're evaluating:
    • Is the information based on data or opinion?
    • Is it descriptive of the past or predictive of the future?
    • Does it have a testable hypothesis?
  • Understand conventional wisdom: Test a specific investment thesis by doing your own research.
  • Get the other side of the story: Read opinions that are contrary to yours.
  • Respect the data: "Charts, tables and numbers are a good place to start for corporate results and economic data. Always check the primary source when possible."
  • Turn off your political bias: "Be wary of commentators who have political agendas."
  • Develop your own framework: Before reading the news, establish your own view of the markets or "the media will force a view upon you."

The post Tips for Digesting Financial Information appeared first on Validea's Guru Investor Blog.

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John P. Reese profile picture
2.07K Followers
John P. Reese is considered an expert in the systematic investing strategies of legendary investors, including Peter Lynch, Ben Graham, Warren Buffett and others. He has been active in the development of fundamentally-based quantitative models since the mid-90s. His research on Seeking Alpha will include stock ideas, strategy and value investing pieces, behavioral finance concepts, systematic and modeling methods as well as other long term investing concepts. John is founder and CEO of Validea.com and also co-founder of Validea Capital Management. Validea Capital runs an actively managed ETF that utilizes the fundamental stock selection models of investing legends as well as a set of robo advisor allocations through Validea Legends and Validea Legends Income. John holds two U.S. patents in the area of automated stock analysis and is considered an expert in the field of quantitative stock selection using the strategies of investing legends. John is a columnist for TheStreet.com, Forbes.com and Canada's Globe & Mail and is co-author of “The Guru Investor: How to Beat the Market Using History’s Best Investment Strategies". He holds a master's of business administration from Harvard Business School and a degree in computer science from MIT.A more complete biography can be found here: http://en.wikipedia.org/wiki/John_P._Reese
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