Larry Fink said it best. The Chairman of Blackrock, the largest asset manager in the world with over $3.5 trillion under management, stated in an interview with Charlie Rose that “Humans are having a hard time adapting to the new realities of media. We are constantly bombarded with information…it’s leading us to invest with an overt fear of the future, and we are now investing for the short-term (May 31, 2012).” Innovation and technology contribute greatly to our evolution, but the ability to process information is increasingly complex. The world of “NOW” is in every facet of our life, from ordering a movie, to reading the latest tweet – everything happens instantaneously. In fact, the multitude of streams in which we receive data seems to be multiplying exponentially. Whether you decide to access the Internet through your landline, on your desktop computer, or wirelessly on your wearable watch or glasses, information will continue to be delivered to us in innovative ways. This powerful, and quickly accessed, information has the ability to create short term swings in financial markets (“Flash Crash”) and longer term fundamental changes in political uprisings (“Arab Spring”).
The founder of Intel, Gordon Moore, made an observation in the ’60s about the pace of technology’s expansion that has been informally recognized as “Moore’s Law.” Moore’s Law implies that the many components processing information will double every two years and, according to Wikipedia, “describes a driving force of technological and social change in the late 20th and early 21st centuries.” Moore’s reverberating effect is that our everyday life has become increasingly connected, bringing each of us closer globally. Processing the flow of information remains ever the more difficult. Many see this as opportunity, while others experience data overload paralysis. We now need to instantaneously filter the barrage of information coming at us from every direction. Technology is changing the footprint of how things are done on a daily basis, from manufacturing companies creating and distributing products to the discovery and storage of energy.
When reviewing your portfolio, try to filter the static and make sense of the fundamentals.
One of the more challenging aspects we hear from successful individuals is how hard it is to manage everything they read, hear, and see. This covers all aspects of media, from print to online. In the past, current events referenced day-old occurrences. Today, a current event is marked in minutes, not days. Everything is so instantaneous and apparent that you have to judge the quality of the information presented and the perceived effect it may have on the world. This leads to an increase in confusion and investing for the short-term as Mr. Fink stated. The ability to “filter the noise” while delivering a clear and precise baseline thesis is becoming more valuable in today’s global media conundrum.
There are few touch points more affected by the flow of information than that of an investment portfolio. As markets can react with extreme prejudice and volatility to anything and everything, trying to gauge short-term market movements can make your head spin. When reviewing your portfolio, try to filter the static and make sense of the fundamentals. Technology will continue to bombard us with mountains of data, but it cannot be a substitute for our need to adapt to, and understand, this evolving media. The process of understanding an individual’s (or institution’s) risk characteristics and legacy desires can only really be done through a meaningful discussion between people, with technology as an aid.