Is quickly acquiring public information about companies the key to investment success? In this post, we evaluate the value of public information and analyze how information can impact investment success.
The Value of Public Information
Many people say that if you quickly acquire public information about a company, you can succeed in investing. However, this is not always true. The value of information depends on how you obtain it. For example, it's natural that people who have succeeded in investing don't share their secrets. The information they used was already public.
The Provider and Value of Information
According to a Portuguese proverb, "If the person distributing the goods doesn't keep the best ones, they are a fool." If the provider of the information is not a fool, the cost you pay to get that information may be more than its actual value. The value of information depends on the judgment of the provider.
Newspapers and Investment Success Stories
People who lecture on investment techniques on TV often advise, "Read newspapers thoroughly." George Soros's investment success story is a prime example. He made investment decisions based on information he read in newspapers. However, simply reading newspapers does not make you wealthy. If that were the case, the editors of the newspapers you read would have already achieved their dream of world domination.
Companies Buying Back Their Own Shares and Stock Prices
When companies actively buy back their own shares, it is said that the stock price is at its bottom. Insiders who know the company's situation well notice that the stock is undervalued and buy it. However, during the financial crisis in 2007, even though American companies bought back $700 billion worth of their own shares, stock prices plummeted, weakening their financial situations. This shows that even companies with insider information can incur massive losses depending on market conditions.
Infomercials in the Stock Market
In the stock market, "infomercials" refer to promotional articles for stock recommendation services. The infomercial articles that constantly appear in a corner of your HTS are not worth your time unless you want to learn how veteran traders lure people in.
Conclusion
Simply acquiring public information about a company quickly does not guarantee investment success. The value of information depends on how you obtain it, and the judgment of the provider is crucial. While reading newspapers is important, remember that those aiming for world domination would have already achieved their dreams. Be cautious with companies buying back their own shares and infomercials in the stock market.