Dealing with that question starts with reflecting how much of an investment "edge" you get by having access to information that is so freely available.
On that score, there's an old concept in economics called the law of diminishing returns. It essentially says that adding more and more of one input, while keeping everything else constant, gives you progressively less bang for your buck.
At the industrial end of this technology arms race, you have the high frequency traders who spend a fortune on advanced communications infrastructure to try to take advantage of split-second changes in millions of prices. On the evolutionary scale, these computer programs make smart phones look like ploughshares.
So, against that background it's not clear that adding the latest market-minder app to your iPhone is necessarily the path to investment success.
The second question to ask is what you are trying to achieve. Are you trying to "beat" the market by finding mistakes in prices and timing your entry and exit points? If so, and given the competition above, you might want to review your information budget.
The truth for most of us is that investment is not an end, but a means to an end. We want to save for a house or put our children through school or look after ageing parents or give ourselves a good chance of a comfortable retirement.
In this context, the most relevant information is about our own lives and circumstances. How much do we spend? How much can we save? What's our risk appetite? What are our future needs? And how much of a cash buffer do we need?
This is the value an independent financial advisor can bring — not in trying to second-guess the market or using forecasts to gamble with your money — but in understanding the life situation of each person and what each of them needs.
Ultimately, markets are so competitive that we really are wasting our own precious resources by trying to game them. What most of us need is to secure the long-term capital market rates of return as efficiently as possible.
So, our limited resource is not speed or access to information, but our own time. We only have a short window to live the lives we want. And that means we should start any investment plan with understanding ourselves.
That's where the edge is.
Nick Stewart is an Authorised Financial Adviser and CEO at Stewart Group – a Hawke's Bay-based independent financial advisory firm based in Hastings. Stewart Group works with individuals, families, and businesses in New Zealand who are committed to pursuing financial planning and wellbeing. Our clients understand the value of independent, goal-oriented and objective financial advice that is free of conflicts. If that sounds like you, we would love to hear from you.
The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from an Authorised Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961.
