"... in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it." Herbert Simon (1916 - 2001)
I wonder if Mr. Simon had any idea how prescient his words would be today when he wrote this more than 35 years ago. In my recent post, Financial Blogs: The Making of Efficient Markets, I commented on the abundance of information and its contribution to the efficiencies in financial markets by reducing the edge that traders and professional money managers have over the average investor.
Since a philosopher is constantly doubting everything, especially themselves, I could not resist the temptation to present a completely opposite observation: Instead of creating market efficiencies, as with the Efficient Market Hypothesis, it is equally arguable that that the same proliferation of blogs may be creating a distracting "over-abundance" of information; thereby, ironically, minimizing the efficiencies that the information could potentially bring...
To successfully "allocate the attention efficiently," I constructed a "portfolio" of financial blogs, just as I would with a group of mutual funds, to create our own efficiencies; thereby overcoming the "poverty of attention:" The prudent investor will only need seven or eight funds or, in this case, financial blogs to construct a diverse, efficient portfolio. Here are the qualities and characteristics each finalist in my blog portfolio will have:
- Its own purpose (low correlation to other blogs) within the portfolio: To prevent significant "overlap" with other blogs. This was especially difficult because there are several high quality blogs with similar characteristics. Of course, I chose the "best of the best."
- Simplicity: If we are to overcome the poverty of attention, distractions and "noise" must be minimal. A great blog will be easy to use and should be easy on the eyes. Quality over quantity is essential. Less is more...
- Diversification: There are certainly plenty of high-quality blogs that serve a narrow purpose; however, I believe there is more value in a blogger that has the ability and resources to report on a variety of narrow subjects, collectively, in the context of the big economic picture.
- Little or no competing interests: The best bloggers are passionate about gathering information and sharing it with others with little or no bias to selling products, catering to corporate sponsors, or attracting advertisers.
- Educational Value: Above all, the blog should be a valuable resource to expand the reader's knowledge, regardless of the source, even if the reader does not understand or agree with the blogger's practices. For example, I am not a trader or market timer but traders can provide a wealth of information; therefore, I find educational value in their economic and market perspectives.
I also diligently researched the blogs in a similar way as I would for mutual funds:
- I started with a universe of hundreds of financial blogs that I selected from my own personal favorites, other "top financial blog" lists, and especially blogs that other bloggers consistently use and/or recommend;
- then I narrowed the list to 15 "finalists;"
- then visited each finalist several times per day for two weeks;
- and strategically eliminated blogs until I ended with a diverse set of 8 blogs...
And here's my blog portfolio:
The Big Picture - Author, Barry Ritholtz, is the "Chief Market Strategist for Ritholtz Research, an independent retail and institutional research firm, specializing in the analysis of macroeconomic trends and the capital markets." Like a true "financial philosopher," Barry's critical reasoning finds doubt in nearly everything he sees, hears, or reads, especially anything originating from the federal government. Mr. Ritholtz also attracts a large amount of seemingly well-informed readers (mostly traders) who frequently post comments (both critical and supportive of Barry's posts). Often, just reading the comments on this blog can be more educational and informative than most other financial blogs out there. Simply put, The Big Picture is the only macro-economic blog you need.
Minyanville is a media company that delivers in its promise to help "secure your future... feed your brain... and make you smile" with a broad mix of financial "infotainment" in a timely, intelligent, entertaining, and insightful delivery. Minyanville has much to offer for just about everyone from the sophisticated trader to individual investors while making otherwise complex content easy to navigate.
The Kirk Report is written by professional trader, Charles E. Kirk, who aims to "help the 'little guy' investor and to provide food for thought." To make a living at trading stocks, the trader must pour over (and understand) a significant amount of information. Kirk demonstrates what I perceive to be the greatest and most necessary character trait of a blogger -- the passion of seeking knowledge and sharing it with others. I was not surprised to learn that Kirk has a degree in philosophy...
Finance Trends Matter is what I consider a blog aggregator, which essentially means author, David Shvartsman, compiles articles from other blogs in one post. Now that's efficient! David does an excellent and consistent job of examining "trends that drive investment markets and shape our world" while adding words of his own for a rounded perspective.
Abnormal Returns is another "blog aggregator" that efficiently stays on top of market events that are essential for any person looking for economic or investment information. Their original tag line says it best: “A wide-ranging, forecast-free investment blog." Abnormal Returns fits into my blog portfolio much like a large-cap index fund would in an investment portfolio -- broad, efficient, and just plain smart.
The Smart Money Report is all substance and no flash. I love the simplicity. I love the content, which is largely absent of distracting commentary common with most financial blogs. A reader can visit once per day and see several posts covering a broad range of financial topics. Author, Larry Holmes (not the boxer), in his own words (and mine), is "someone to point you in the right direction, provide you with a financial education, and maybe share a little wisdom with you..."
Blueprint for Financial Prosperity: I generally resist "personal finance" blogs because they are usually boring, self-serving, useless or some combination of the three, especially for people who have some kind of financial background such as I. But Blueprint, authored by a "twenty-something recent university grad" covers "shopping, insurance, investing, retirement, loans, credit cards, mortgages, bargain hunting and other issues related to personal finance." In the two weeks reading Blueprint posts, I was able to find useful and valuable information I would have otherwise overlooked or missed. The author is a self-professed "personal finance novice, struggling to understand some pretty complex and confusing topics" and says he is "by no means an expert on anything." In true philosopher fashion, he is aware of his own ignorance, which is the definition wisdom...
Blog Carnival is actually an aggregator of aggregated blog posts where a sponsoring blogger "takes the time to find really good blog posts on a given topic, and then puts all those posts together in a single blog post called a 'carnival.' Carnivals come in edited 'editions,' just like magazines or journals." Blog Carnival is not a financial blog but I find it to be a highly efficient one-stop shop of blog aggregation. Thus far, my personal favorite carnival is the Carnival of Personal Finance.
As consumers of information, we must be cognizant of what information consumes -- our attention. Ironically, more information does not equal more knowledge: It equals more distraction. We must be careful in our quest for knowledge that we do not defeat what I believe to be the original and ultimate purpose for the quest -- the attainment of wisdom.