As an analyst, reading all the news that is fit to print is not a good value proposition. It just takes up too much time and leads to the confusion of work with effort.

Problem with News Consumption

Too often news articles just try and fit the facts with current market behavior. If employment figures surprise on the upside and the market rises, it is because real economy is growing. If the market falls, then it is because expectations are that the Fed will raise rates. Granted the weights of factors change but not to the degree suggested by journalists. Events are used to explain the action not tell us about the future.

Solutions for Overcoming News Addiction

So what is the answer for the news junkie going through withdrawal? Here is a simple list that I find helpful:

  1. Limit news consumption
    Focus on one or two weekly summaries.
  2. Data-driven focus
    Only read articles with data that support the story.
  3. Testable information
    Focus on stories that can be verified with data.
  4. Go to the source
    Avoid relying on third-party interpretations and go directly to primary sources (e.g., Fed speeches).
  5. Avoid repetition
    Stop reading if the opinion is redundant with what you’ve read before.
  6. Future-focused stories
    Concentrate on news that provides insights into the future rather than past events.
  7. Find Consensus
    Read to understand the consensus rather than to reinforce your own opinion.
  8. Price data
    Let market prices guide your interpretation; they reflect the market’s collective opinion.
  9. Read diversely
    Engage with smart writers and topics outside your comfort zone.

Trend-followers get it right by saying prices are primal. Quants get it right by focusing on the data and the probabilities. Those that can tell you all the details of yesterday’s news without a framework will get it wrong.