Wikipedia tells us the information age began around 1989 with technology allowing individuals to "explore their personalised needs, therefore simplifying the procedure of making decisions".
The information age has certainly meant easy access to vast amounts of information but I'm not convinced it has made decision-making easier. You could argue we have so much information that arriving at the truth to make decisions has become increasingly difficult.
Using medical science as an example, it is heartening technology has meant cures and treatments are being developed left, right and centre. But the medical breakthrough or expert opinion of today is quickly surpassed by a discovery by a different expert tomorrow, with an equally convincing thesis.
It is estimated around 560,000 new medical articles are published and 20,000 new medical trials are registered every year. That's equivalent to 1500 new articles and 55 new trials per day. There is no way health professionals can keep up with the latest medical research, let alone be sure today's solution is indeed best for their patients.
In the old days, my grandparents would have trusted the local GP to know what was wrong and how to treat it. He or she was the expert and their word was gospel. These days, healthcare is more complex, there are more treatment choices and there's a good chance that any two medical practitioners will disagree on the best option. It is not surprising people seek second opinions or become their own practitioner by Googling symptoms and treatments.
So it is with investing. Every day in the markets, 100 experts happily provide their considered views of what markets will do next and what investments will be the best performers.
Investment research and analysis has become democratised. Just as the GP used to be the expert, large financial firms - with their teams of investment professionals - used to be the primary source for recommendations and advice.
Now there is an expert on virtually every market, every sector and every strategy - happy to provide an opinion free of charge, through a myriad of media channels.
A greater volume of information, and easy access to it, hasn't necessarily led to health professionals being more expert. Easily accessible investing news and market data hasn't made investors more expert, even if they tell you otherwise.
Behavioural scientist Becki Saltzman recently wrote about the 'death of curiosity' - or our propensity as humans to resort to shortcuts in an attempt to make sense of all the information bombarding us.
We are seduced by easy answers to hard questions, particularly when they have the lure of authority (expert opinion, science, research, studies and facts). In accepting these 'curiosity killers' at face value, we don't question further or conduct our own analysis. Instead the information becomes accepted truth, whether it is accurate or not.
Saltzman quotes Harvard researchers who say there are certain anchoring words that make us 93 per cent more likely to believe the information that follows. The five biggest are:
1. According to experts ...
2. Studies show ...
3. Research indicates ...
4. Science says ...
5. It's a known fact that ...
Saltzman provides suggestions on retaining our curiosity and thinking insightfully. She advises us to challenge expert opinion by questioning how the information was measured, how the tests or studies were conducted, how it compares with the contrarian view and how legitimate and proven is the source.
This approach is just as valid for investment views and opinions. One thing people often get wrong in investing is taking a single news item, opinion piece or data point and immediately drawing a conclusion from that information.
This is a lazy and potentially dangerous approach. Investors should always be sceptical, digging a little deeper, challenging the pedigree of the information, and forever remaining curious.
