Free and Abundant Information

Two great minds of our time, Jeff Bezos and renowned investor Wilbur Ross, recently discussed information in two separate interviews. Harvard interviewed Bezos in October 2007 and Fortune Magazine interviewed Wilbur Ross in March 2010.

Mashing up Bezos’s and Ross’s insights about information, I built this checklist that helps us think about how we use information in our trading activities:

1. Information perfection is on the rise.
2. Information costs are going down.
3. Market information is timely.
4. Market information is abundant and it overwhelms.
5. Market participants have not demonstrated more ability to gain meaning from more information.
6. Therefore, the value of the expertise and ability to interpret information goes to infinity.

Since it has never been cheaper and easier to access the internet information reservoir, the value of trying to assimilate more of it goes to zero.

Traders should focus on honing their ability to interpret vast amounts of information instead of trying to get more of it.

Experimentation—at Bigger Capital, we have decided to explore the following avenue to boost our ability to interpret information better:

We have begun viewing our interactions with other market participants and information obtained from these interactions as defining an internet space in which we operate. Our challenge is turn that space into a creative space in which ideas can collide, fuse, and recombine into some powerful trading insights.

We are just starting to walk along this dark alley, but we will keep you posted on our progress.

Do you have any insights into how traders can increase their ability to interpret information?

Written by Michael Bigger. Follow me on Twitter and StockTwits.

Comments

[Jess Peletier]

Hi Michael, I think part of increasing our ability to interpret information requires us to reduce the amount of information we are exposed to. Exposure to too much information causes us to lose focus and we end up confused and overwhelmed, and unable to process or absorb what we are seeing.

I think reducing our universe in terms of information flow can allow us to filter out alot of surplus, and will ultimately create an environment where we can actually increase our ability to use the limited information we receive to i's maximum.

Just my 2 cents :)

[@flowtastical]

Michael,

Since the second half of this year I have had these exact thoughts. How can I increase my ability to interpret information when there is increasing amounts of information overload?

I'd like to share two ways.

First, I strive to reduce the information that I take in. This includes information from good sources as well. For example, visiting a profitable trader's blog or service but he or she does not trade in a way that fits your style or personality. Although it is good information, it will likely add to information overload.

Second and relating to the first point, the sources that I rely on for information I have detailed exactly how I will use the information. How many people actually do this? For example, I follow very few people on twitter. @traderflorida @popdoctrader @adamg_smb @biggercapital. I know in detail what exactly I am looking for from those information sources and when that type of information pops up, I assimilate it like second nature.

Since I have applied this to my daily life, I have noticed an increase in the quality of information I take in. I hope I have shared something useful to the readers.

Eric