I’ll fess up to it – I am an information ‘wonk.’ In my business days, information was a ‘currency,’ and I made a reasonable coin out of it. Today, information is everywhere, and its largely free.

When it comes to investing, I look at so many individual ‘monitors,’ which takes time, but it scarcely improves my batting average; yet I feel very confident every time I stride out to the investment crease.

So, I went searching for a reason in the realm of psychology and I came across an experiment by Paul Slovic back in 1974 which has been repeated a number of times subsequently and found to be correct.

Short cut to the conclusion: Whilst its logical to think being ‘better informed’ leads to better decision-making, the flip side of the coin might well be that the additional information could just be topping up on confirmation bias, as we strive to prove ourselves right.

Here’s the experiment and the conclusions represented graphically.

In 1974, Slovic gathered a group of experienced horse racing handicappers to assess their success in predicting the outcome of 40 horse races conducted over four rounds. Because there were exactly 10 horses in each race, each handicapper’s bet could be expected to be right 10% of the time through random guessing alone.

Round 1: He gave them just five pieces of information they wanted on each horse such as age, fastest speed, jockey’s experience, or weight etc The result was that they were 17% accurate (fair enough as it is nearly twice the random result). He asked them to judge their ‘confidence level’ in their selection which was which was 19%.

Round 2: they received 10 pieces of information

Round 3: 20 pieces of information

Round 4: 40 pieces of information.

Now, despite the additional information, it didn’t improve their accuracy. It remained at 17%. But their confidence increased the more information they received to 34%.

So, the real question to be answered is this: Am I really becoming more accurate through grabbing more data or am I just fooling myself to prove my ‘want to believe’ thesis is correct? And does this additional deep dive on data make me anchor to my original thesis going forward?

In many instances, I am guilty as charged! Thankfully, I have evaded sharing a cell with Big Bubba with all the painful consequences…just a damn good thrashing with swimming noodles!

In 2024, I am going to rationalise my informational requirements and listen more to the ‘thoughts of the market’, which I previously viewed as Hoodoo Voodoo!