Tuning Out The Noise
Life has an information overload problem: Is it just noise or is it signal?
Never has it been more important to be able to differentiate between the signal and the noise.
The tsunami of information that crashes over us each day has only grown stronger. It is hard to decipher between what is and isn’t. What might matter in 60 minutes, 60 hours, or 60 weeks, and what might not. Everyone has advice on what we should do. We are told we must take life seriously and the fun, or really the actual living, should come later down the line. People shout about the boxes we should check to climb the ladder of success. It is constant waves of information that crash over us and suffocate us.
With so much information out there, we must sift through the noise to try and figure out what truly matters. Our information diet is fat and happy, but just like our regular diet, it is important to be mindful of what we consume and how that influences us.
About two weeks ago, on Monday, August 5th, the S&P 500 slid 3% in its worst day since September 2022. There were calls for the Fed to cut rates. People were telling others to get out of their current investments. Some questioned whether we were in a recession, while others wondered what they should do with their 401k. The sell-off fueled hysteria. We were told the S&P 500 was beginning to crash. The growing uncertainty was not helped by everyone being so in tune with every market tick.
But, it turned out to be mostly noise.
Fast forward to today, the S&P 500 has regained all of those losses, has been flat for the past month, and year to date is still up 18%. There is a quote that I like from Jim Bogle, the founder of Vanguard,
“The stock market is a giant distraction from the business of investing.”
The market, typically, experiences three 5% corrections and one 10% correction every year. But zoom out a bit, from 1871-2012, every single 20-year period earned a positive real market return. Those corrections seem to be a whole lot of noise if every single 20-year period earned positive returns.
It can be hard to decipher what is worthwhile because we are fed so many different opinions from the crowd. Should we sell because the market will crash or should we just set it and forget it? Our hyperconnectivity provides us with more information than we possibly have use for, making it very easy to become anxious and overwhelmed. The volume of information we consume ensures at least one thing is sure to strike a chord, leaving us to second guess if we are investing correctly.
There are markets everywhere that are incentivized to distract us. Our social media algorithm feeds us posts to get us to linger a bit longer on our feeds until we are watching a lion chasing a gazelle in sub-Saharan Africa, Instagram gives us ads to convince us to buy our 43rd pair of shoes that we surely don’t need, and Twitter threads persuade us that everything we do should be successful. The background music plays everywhere, and it is loud.
But we could go on and on about how fear gets clicks, how the Twitter algorithm encourages slop, and how the only news we see is bad. The tsunami of information that crashes over us is stronger than ever before, no doubt about it. This is more to say that a strong signal is more necessary than ever before. It is important to be mindful of what we consume and what we focus on. Only listen to the crowd if you want to be a part of the crowd. There’s plenty of information to fuel any narrative and plenty of “experts” who always have a take. But most of it is just noise.
And about that market collapse two weeks ago where people were yelling to sell? Before yesterday, the S&P 500 had an 8-day win streak, its 54th since 1950. And now stocks are about 1% from new highs. Quite good.
Ultimately, I think the world needs a little less noise and a lot more signal. It can be up to us to find what side of the equation we want to be a part of. On Monday, August 5th, it was once again all about those who could tune out the noise. History has proven it has always been that way. But it is never easy. Our resolve is always tested.
You tip your hat to those working to squeeze every ounce of juice out of the day, giving to the world while asking for nothing in return, creating things on their accord, and not messing with their 401k because we have a 3% down day. It takes resilience and bravery. It takes tuning out the noise. The rest is background music.
As always, appreciate you reading.
-Scantron
Thought-provoking read, Scantron.
I could definitely go for a little less noise in the world.
And in my own head too.
Meditation has taught me that the signal-to-noise ratio of the human brain is pretty low. The brain continually churns out thoughts, many of questionable veracity, most of limited utility, and some full-on counterproductive (leading to anxiety, self-criticism, etc.).
Realizing this about my own brain has helped me better handle the noise of the world.
The world belongs to the patient. - Great quote that puts emphasis on tuning in for signals on the long term.