I was going through one of my feed this morning and I noticed that it had picked up a piece called 5 apps every trader should have So I though why ot have a look, I like to clutter my smartphone up with stupid crap – particularly if its free. So I had a gawk at the list and it contained the usual suspects like Bloomberg which I already have and which is not bad but crap for FX. Yahoo which I dont have because I thinks its rubbish. Stock Watch which lets you track portfolio’s – why bother when I can log into the dealer with one click, a finance calculator app which I already have one of and finally Stock Twits.
Stock Twits which I have been aware of for some time calls itself The fastest, real-time, free social network for investors and traders. If ever you wanted to fail as a trader then join this and subject yourself to the premature ejaculation of stupidity that is stock trading social media.
Noise is the antithesis of true trading and social media is little more than noise. More information doesn’t mean better decision making. The more information people receive when making a decision the more confident they become in their decision making but the worse the outcome of their decisions.
Michael Mauboussin of Legg Mason, a fund-management group, cites a study that gave horse-racing handicappers varying amounts of information when ranking horses. The more information they received, the more confident they became about their answers. But the success of their predictions was actually worse when given 40 pieces of information, than when given five.
The notion of information overload afflicts all humans. Consider the case of the underfunded and busy ER at Cook County in Chicago. Within this environment the traditional testing for a heart attack involved a complicated decision making process where many variables were measured and monitored and a decision made. Turns out this method is inferior to using a simple four variable test involving electrocardiogram testing, heart failure, low blood pressure and unstable angina. This is a life and death decision made using four variables only.