Bring the Noise
There are three types of investors: momentum, valuation and noise. Momentum investors care about trend, valuation investors care about fundamentals and noise investors care about a random assortment of stuff. Many of us are noise investors, even though we wont realise it.
Of course, investment approaches do not all neatly fit into such discrete categories. Most are a combination of momentum and valuation, and every investor lets some noise into their world. The critical question is – how much is market noise impacting our behaviour?
The more influential noise is, the more inconsistent and unpredictable our decisions will be. When observing the choices made by a noisy investor it will be difficult to discern any recognisable pattern.
This is not a path to good investment outcomes.
More here – Behavioural Investment
