hompage
  • Banking
    Best Products
    • Savings Accounts
    • Money Market Accounts
    • CD Rates
    • Checking Accounts
    Calculators
    • Compound Interest Calculator
    • Savings Calculator
    • CD Calculator
    • Retirement Calculator
    • See All Calculators
    Popular Reviews
    • Bank of America
    • Capital One 360
    • Chase
    • Citibank
    • Marcus Goldman Sachs
    Read & Learn
    • America's Best Rates
    • Bank Fees Survey
  • Investing
    Best Products
    • Best Money Investment Options
    • Best Brokerages
    • Best Robo Advisors
    Calculators
    • Investment Calculator
    • Compound Interest Calculator
    • Retirement Calculator
    Popular Reviews
    • Ally Invest
    • Merill Edge
    • TD Ameritrade
    Read & Learn
    • Investment Quiz
    • Tax Preparation Fees
  • Personal Loans
    Best Products
    • Best Personal Loans
    • Debt Consolidation Loan
    • Home Improvement Loan
    Calculators & Guides
    • Personal Loan Calculator
    • Boat Loan Calculator
    • Guide to Personal Loans
    Popular Reviews
    • Best Egg Review
    • LendingClub Review
    • Lightstream Review
    • Payoff Review
    • Prosper Review
    • SoFi Review
    • Upgrade Review
    • Wells Fargo Review
  • Credit Cards
    Best Cards
    • Best Credit Cards of 2022
    • Best Balance Transfer Credit Cards
    • Best Business Credit Cards
    • Best Cash Back Credit Cards
    • Best Rewards Credit Cards
    • Best Secured Credit Cards
    • Best Student Credit Cards
    • Best Travel Credit Cards
    Calculators
    • Credit Card Interest Calculator
    • Debt Payoff Calculator
Best Products
  • Savings Accounts
  • Money Market Accounts
  • CD Rates
  • Checking Accounts
Calculators
  • Compound Interest Calculator
  • Savings Calculator
  • CD Calculator
  • Retirement Calculator
  • See All Calculators
Popular Reviews
  • Bank of America
  • Capital One 360
  • Chase
  • Citibank
  • Marcus Goldman Sachs
Read & Learn
  • America's Best Rates
  • Bank Fees Survey
Best Products
  • Best Money Investment Options
  • Best Brokerages
  • Best Robo Advisors
Calculators
  • Investment Calculator
  • Compound Interest Calculator
  • Retirement Calculator
Popular Reviews
  • Ally Invest
  • Merill Edge
  • TD Ameritrade
Read & Learn
  • Investment Quiz
  • Tax Preparation Fees
Best Products
  • Best Personal Loans
  • Debt Consolidation Loan
  • Home Improvement Loan
Calculators & Guides
  • Personal Loan Calculator
  • Boat Loan Calculator
  • Guide to Personal Loans
Popular Reviews
  • Best Egg Review
  • LendingClub Review
  • Lightstream Review
  • Payoff Review
  • Prosper Review
  • SoFi Review
  • Upgrade Review
  • Wells Fargo Review
Best Cards
  • Best Credit Cards of 2022
  • Best Balance Transfer Credit Cards
  • Best Business Credit Cards
  • Best Cash Back Credit Cards
  • Best Rewards Credit Cards
  • Best Secured Credit Cards
  • Best Student Credit Cards
  • Best Travel Credit Cards
Calculators
  • Credit Card Interest Calculator
  • Debt Payoff Calculator
    Ad Disclosure
    Compare MMA Rates
Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all account options available. Click here to go to our Editorial and UGC disclosure. *APY (Annual Percentage Yield).
Please enter the text to be searched

Tuning Out The Noise In Investing

Bad information can lead to costly investment mistakes. Read six tips for focusing on relevant information so you can filter out distractions.
mm
By Richard Barrington

Last updated: April 27, 2022
Our articles, research studies, tools, and reviews maintain strict editorial integrity; however, we may be compensated when you click on or are approved for offers from our partners.

One of the toughest things about investing is tuning out all the noise: information that is irrelevant, unreliable or downright misleading. The more you eliminate distractions, the better your investment decisions will be.

This is hard is because of there is so much economic, industry and company-specific information to follow and process. And that does not even touch on the hype, from investment themes that draw a bandwagon of popular support to hot stock tips designed to drive up prices. How do you tune all this out? One way is to clearly identify the information you need to make rational investment decisions, and then ignore everything else.

Here are six things worth focusing on when making investment decisions.

1. Focus on earnings, not price performance

Low bank rates and bond yields have helped drive people toward stocks in recent years, sending the market to new highs. The S&P 500 is up about 55 percent since the end of 2011, and that strong performance is drawing still more investors into the market.

The problem is, S&P 500 earnings are up only about 40 percent over that same period. For the market as a whole and for individual companies, you should be more focused on how earnings are performing, because that will drive future price performance.

2. Consider barriers to entry

So you found a company which has been delivering impressive earnings growth. That’s great, but you have to remember that in any business, success attracts competition.

When you consider investing in a company, think about whether they have any unique advantages that would make it difficult for competitors to replicate what they do. Otherwise, imitators will spring up to take away some of the company’s market share.

3. Recognize differing perspectives

When you have an investment idea, try to figure out whether other investors already know what you know. You probably won’t have any special edge on information, so try to figure out why your perspective on a stock might differ from the popular consensus, because that is what creates opportunities.

4. Understand the sensitivity of inputs and outputs

A company’s earnings are a function of its inputs and outputs — what materials and resources are needed to make its products, and how much of those products it can sell.

So, in trying to figure out how a company’s earnings will perform, you should know what costs their inputs are sensitive to, and whether those costs are under control. Similarly, you have to think about a company’s markets and how much appetite they have to continue buying.

5. Set targets

Investing is largely about assigning value. There are plenty of great companies that are mediocre investments because their prices have already risen sharply. You not only need to understand a company’s business, but you need to be able to assign specific buy and sell prices based on the value of that business, so you will know when to get in and when to get out.

6. Analyze your successes and failures

Developing a consistent process is one way to repeat your successes and avoid repeating your failures.

Not every investment works out, but if you tune out the noise to focus on the facts, you should be able to minimize your mistakes.

You might also like:

Need the best money market account? Heed these tips

Best banks in America: Is it time to switch?

Unconventional CDs: Are they right for you?

About Author
mm
Richard Barrington
Richard Barrington has been a Senior Financial Analyst for MoneyRates. He has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications. Richard has over 30 years of experience in financial services. He has earned the Chartered Financial Analyst (CFA) designation from the Association of Investment Management and Research (now the “CFA Institute”).
See Best MMA Rates 2021
top-reviews RELATED ARTICLES
When Opening Multiple Money Market Accounts Is A Smart Move
By Richard Barrington
IRA Money Market Accounts for Retirement Savings
BY Richard Barrington
2019 Outlook - 6 Factors Affecting Savings & Money Market Rates
BY Richard Barrington
Money Market Accounts Vs. Savings Accounts
BY Richard Barrington
Batter Up! 9 'Players' for Your Investment Line-Up
BY Richard Barrington
Home-Field Advantage - 7 Reasons to Favor US Stocks
BY Richard Barrington
7 Straightforward Rules for Asset Allocation
BY Richard Barrington

Home » money-market-account » Tuning Out The Noise In Investing

hompage
  • About Us
  • Contact Us
  • Privacy Notice
  • Terms of Service
2022 MoneyRates
Twitter
Advertiser Disclosure: Many of the offers appearing on this site are from advertisers from which this website receives compensation for being listed here. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). These offers do not represent all account options available. *APY (Annual Percentage Yield).
Editorial Disclosure: This content is not provided or commissioned by the bank advertiser. Opinions expressed here are author's alone, not those of the bank advertiser, and have not been reviewed, approved or otherwise endorsed by the bank advertiser. This site may be compensated through the bank advertiser Affiliate Program. To learn more about our approach to content and product assessments, visit our Editorial Policy and Product Assessment Methodology page.
UGC Disclosure: These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.
Information from third party sources deemed reliable but not guaranteed. Disclaimer: Because rates and offers from advertisers shown on this website change frequently, please visit referenced sites for current information. This website may be compensated by companies mentioned through advertising, affiliate programs or otherwise.
California - Do not sell my info
2022 MoneyRates