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How to Invest in A World of Information-Overload

I remember a time when my parents had to go to the stock broker simply to find out the share price of a company. Today’s investing world is vastly different.

We now live in an era in which information is abundant and readily available at the click of a mouse or a tap on a smartphone. Such convenience in obtaining information makes it a great time to be an investor.

For instance, you are able to get transcripts of the earnings presentations of say, Singapore’s three telecommunications providers, Singapore Telecommunications Limited (SGX: Z74) StarHub Ltd (SGX: CC3), and M1 Ltd (SGX: B2F), from the internet for free. There are also annual reports, earnings reports, investor presentations, and much more.

While I applaud the ease of information-gathering, it also presents investors with another problem – the problem of having too much information.

Drinking from a fire hose

In a world of abundant information, the problem is no longer about access to information. Rather, it is the insights from the information you gather that matters more.

Ariel Investment’s chief investment officer Rupal J. Bhansali explains this in an interview:

“Then what we try to do is we understand that in investing today, the battleground is no longer having access to information. That was yesteryear’s investing.

Today’s investing in 21st century is about asking the right question. You’re no longer going to be a good database. You’re going to be a good search engine. The answers are there to be found. It’s the right questions to ask.

That’s how we differentiate ourselves as well. We’re not looking for information. We’re looking for insights.”

In essence, Bhansali believes that having a good database of information is no longer enough in today’s investing world. Rather, it’s about asking the right questions that would help investors arrive at better investing conclusions. Insights derived from asking the right questions can be much more valuable than simply having a great database of information.

In the same way, having information on the stock price movements of Singapore’s telcos tells us very little about each telco’s business in Singapore. But, if we can glean insights on, say, how the telcos think about competition, that may provide much more valuable insight.

With a better understanding of a business, we can then be positioned to invest better.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.