Overview – Sometimes, the Best Source of Information or Insight May Be Other People
How many opportunities and/or critical pieces of information have you come across in your life simply because you happened to speak to the right person or happened to be part of the right group?
What about the number of “aha!” moments you’ve experienced throughout your life, not because you racked your brain for so long, but because you took the time to listen to what someone else had to say? We all try our best to approach a problem from as many angles as possible, but there are only so many that we can realistically cover.
Sometimes, the best information and insights come not from our effort and intellect, but from the effort, intellect, and experiences of other people. Spending a few minutes listening to what someone else has to share may potentially save us from hours being wasted trying to achieve the same result.
Most investors are always searching for better information or are trying to extract even more detailed insights. Instead of burning through countless hours in exchange for marginal gains, they could instead listen to other investors and get the results they want in a fraction of the time.
Understanding the Limits of Our Investment Abilities
Many investors take great pride in the fact that they make their own decisions, constantly improve themselves, and do their best to stand out from the rest of the crowd. Indeed, there’s an abundance of very smart and competent investors out in the world who are always chasing greater heights.
While there’s nothing wrong with being proud of and having confidence in your investing abilities, it’s important to remember that our abilities can only take us so far before we eventually run into certain limits.
In the overview, we talked briefly about information gathering and insight extraction – the reason why those two areas were brought up and are the main focus of this article is that they are the areas where investors quickly run into a brick wall.
You can spend hours on end trying to gather the best investment information possible, but if your information gathering is limited to publicly available sources such as annual reports and news releases then the information you find will be limited to what’s publicly available.
You may have top-notch analytical abilities, but at the end of the day, the insights you extract from an annual report or financial statements are limited by your current level of investment knowledge, experience, and skill.
Investors can cover a lot of ground on their own, but there’s only so much they can do before they inevitably run into diminishing returns.
When faced with this dilemma, what can investors hope to do?
One option is to seek assistance. After all, one of the best ways to deal with a problem that exceeds your current abilities is to seek help from someone you believe has the abilities, knowledge, and experience needed to solve the problem at hand, or to at least point you in the right direction.
While seeking assistance sounds easy enough, for some investors this is much easier said than done. Not every investor has an extensive network they can turn to at a moment’s notice, and some investors may not even have a single person in their life they can discuss investing with to the same extent that they can. If that’s the case, what other options are there?
Luckily, we live in the digital age, and given how easy it is for investors all over the world to voice their thoughts and opinions on the internet, and with just as many people willing to start discussions around those thoughts and opinions, this leaves us with one more option: taking the time to listen to other investors.
When We Listen to Other Investors, We May Discover Gaps We Didn’t Notice Before
As we talked about in the overview, sometimes the best information and insight may not come from our efforts, but instead may come from taking the time to listen to what others have to say. That’s because other people may be privy to certain bits of information we aren’t or can extract deeper insights than we could hope to on our own.
No investor knows everything, and no matter how smart or experienced an investor you are there will be times when they come across a problem or situation that will leave them stumped.
Listening to other investors is such a potentially powerful thing to do because it reveals gaps in our knowledge, skill, and experience we may not have known were there in the first place. Other investors may provide the answers you need in a matter of minutes as opposed to wasting endless amounts of time trying to find the answers yourself.
Sure, overly proud investors may choose to spend more time and effort to find the extra information they want or to perform more detailed work, but are all the extra hours they burn in the process worth it just to maintain their pride?
We’ve previously talked about how hubris can quickly destroy any investor’s career – refusing to seek help and instead trying to do everything on your own is a classic example of that.
Assuming you value your time and don’t allow your sense of pride to overtake your logical thinking, then listening to other investors may prove to be a very worthwhile thing to do, saving you precious time and sparing you from unnecessary stress in the process.
The Major Problem With Listening to Other Investors
Although listening to other investors may lead to new information and insights you’ve never come across before, there is one issue that arises whenever you listen to others – assessing the quality of what they’re saying.
Investors today can share their thoughts, bits of information, and insights with people from all over the world, but the implicit assumption being made is that the people who share their information and insights with others know what they’re talking about.
When you listen to other investors, you may be listening to someone who has years of investment experience to their name, or you could be listening to someone who just started learning about investing yesterday. Differentiating between the two is usually very difficult to do unless you explicitly ask someone for their credentials – even then they could still be lying.
If it’s so difficult to verify the credentials of investors you’ve never met before, does that mean you should always be suspicious of what others are saying? Not exactly. By maintaining a healthy sense of skepticism, you can listen to what others have to say first, then take the time to verify (or find a second opinion on) what they’ve said later on.
There’s a lot of value to be had when you take the time to listen to other investors, but this should act as a supplement to your own efforts, not compensation for a lack of it. Some investors may provide great information and/or insights, while others may not – you won’t know unless you perform your own work first.
In the End, You Must Still Perform Your Own Work and Form Your Own Conclusions
It’s easy to fall into the trap of thinking that, since you can simply ask other investors for information and insight, you don’t need to do any of the work yourself. After all, why should you if all you need to do is ask other people for what you need?
If all you did was listen to what other investors have to say without performing your own due diligence and forming your own conclusions, how could you possibly tell if what they’re saying has merit or is complete nonsense?
If you ask 10 investors what they have to say on a certain matter, you’ll most likely get 10 different opinions. How do you decide which opinions are the most valuable ones without first understanding the matter at hand?
In investing, everything starts and ends with you. You get the ball rolling by performing your own work and deciding which goals to pursue, and along the way, you can seek the help you need from others to help point you in the right direction. However, when it’s time to make a decision this falls entirely on you and depends on the conclusions you reached.
Remember, the point of listening to other investors is to fill the gaps in your knowledge or analysis that can’t be filled simply by exerting yourself more, not having others make decisions on your behalf. You aren’t correct because others say you are, you’re correct because your facts and analysis are.
Wrapping Up
No matter how smart, experienced, or skilled an investor is, there’s only so much they can accomplish on their own. It’s only a matter of time before they run into a brick wall, whether they’re trying to collect information or extract insight from the information they currently have.
When faced with such a dilemma, an investor can seek the help of others, or if no such help is readily available, they can listen to other investors instead.
Taking the time to listen to other investors can help us find the information we want in less time, as well as reveal new insights to us we previously failed to identify. Sometimes, listening to what others have to say can save us from wasting hours trying to get the same results.
While listening to other investors certainly has merit, the hard part is assessing the quality of what others are saying. Because of this, it would be wise to treat the thoughts of other investors strictly as a supplement to your own work.
In the end, investors are still required to perform their own due diligence and form their own conclusions. Listening to other investors can help point you in the right direction, but in the end, the decisions you make depend entirely on your own facts and analysis.
