How Good Are You at Tuning Out the Financial Noise — Really?
On Friday, SpaceX began trading on the Nasdaq. It is being called the largest IPO in stock market history — a $1.77 trillion valuation, a ticker (SPCX), and enough media coverage to make your head spin.
And I’ll be honest: my first thought wasn’t “should I buy shares?” It was: today is going to be filled with a lot of noise.
Especially since I know retail investors — like you and me — are way down on the totem pole and actually risk losing money. That’s because the first to make money from an IPO are the underwriting banks, institutional clients, pre-IPO investors, and the company going public. But, you’d never know this from the financial media ecosystem that has covered the lead up to this — seemingly non-stop.
So, I was more “blah” and less “that’s interesting.”
Days like today serve as a great reminder of this:
There is a tremendous amount of financial noise you and I have to wade through in order to have the clarity of mind to feel confident about the choices we make.
Financial Noise; What’s That?
Believe it or not, I didn’t just make up the term “financial noise” to suit the purposes of today’s email.
According to Investopedia, “...noise refers to information or activity that confuses or misrepresents genuine underlying trends. In the financial markets, noise can include small price corrections in the market as well as price fluctuations–called volatility–that distorts the overall trend.”
“Financial noise,” along with “stock market noise,” are technical terms used in the industry and to sometimes describe a type of trader.
Today, I am taking creative liberty to share other ways I believe financial noise can show up for you. Along the way, I’ll also offer some suggestions on how to counter the negative effects of it.
Information overload
Where do you turn for guidance and help when you have a question or challenge on how to manage your personal or business finances?
If this question looks familiar, it is because you’ve taken a workshop of mine; it’s part of the pre-session questionnaire. 🙂
Who, what, or where are your sources of information, inspiration, and action?
As you reflect on what comes to mind, is what you are hearing from your different sources complementary, or are the views opposing? Are you listening to experts or so-called experts?
In order to minimize the noise of information overload, be discerning about your sources (who, what, where) so that you aren’t unknowingly pushed off your game-plan.
But knowing where to look is only half the battle. The other half is knowing what to do once you have the information.
Lacking a decision-making framework
I’m known for saying, “having a choice is not the same as making a choice.”
And despite the many tools available to help improve the speed at which and the quality of the decisions you make, does it sometimes feel harder to actually make a decision? If you said, “yes,” I wouldn’t be surprised.
What I’ve discovered and observed is if you don’t have or follow any rules to guide what you’ll say “yes,” “no,” or “hold” to, and if you don't have a way to get to that yes/no/hold, you run the risk of not making a decision!
For example, rules like:
making a list of possible solutions and options;
creating a pros/cons table to identify the risks you are willing and unwilling to take;
creating a timeline for both gathering information and setting a deadline by which to make a decision
It doesn’t have to be fancy and elaborate, but without a decision-making framework, you limit your ability to reverse engineer how you arrive at the choices you make.
Plus, you run the risk of evaluating the validity of your choices purely based on the outcome…and not also on the process that influenced the outcome.
Having rules and following a process is how you minimize the noise of distractions and procrastination - the two things that can frequently get in the way of even the best decision maker from time to time.
And even with a solid decision-making framework in place, there’s one more thing that can quietly undermine it.
Clutter
Clutter can reveal itself in a variety of ways: visually (think: social media), physically, digitally, mentally and/or emotionally. When it comes to money, it shows up in how you handle (or don’t) financial statements and notifications and decisions. And sometimes, even purchases.
Clutter is a form of financial noise, too because of how its presence can block your ability to see and think clearly.
Noise, in whatever form it takes, and however it shows up tends to cause confusion and frustration.
But from my perspective, your job (and mine) isn’t to block out the financial noise around you. It is to acknowledge its existence and to be aware of what financial noise is for you - what does it usually look and feel like. And then to create buffers to turn down the volume of said noise.
Managing the Noise
So, what do you do with all of this?
You don’t have to go off the grid or swear off financial media entirely. But you do have to get honest with yourself about what’s actually helping you — and what’s just keeping you busy.
Here’s a question worth sitting with:
When you consume financial information, do you walk away feeling clearer — or more anxious?
If it’s usually the latter, that’s a signal. Not that you need more information, but that you need a better filter.
Last week, we talked about the difference between watching your money and actually managing it. Financial noise is a big part of why that distinction gets blurry. It’s hard to hear your own strategy when the volume around you is turned all the way up.
The good news? You get to control the dial.
Over the next few weeks, we’re going to keep pulling on this thread — because the habits you and I develop around how we take in financial information shape how we make financial decisions. And that is worth paying attention to.
About Jacquette
I love to ask questions and spark aha moments. I love to talk about why success with money is about more than just the numbers, and how the cultural impact on the intersection of money, business, and life matters–A LOT! And, I really hope I help people feel seen, heard, and not judged—especially since money is emotional and personal.
