Portfolio managers are bombarded with financial information and must become adept at sifting out what is useful. In a recent Enterprising Investor article, Robert Martorana, CFA, offers some tips on how to accomplish this daunting task:

• Focus on the future, not on the past: Most content that focuses on past results “has little chance of leading to better results.”
• Fact vs. fiction: When “confronted with the hype and sensationalism now masquerading as news,” it is increasingly important to quickly identify “nonsense” and move on.
• Ask yourself three questions regarding the information you’re evaluating:
  • Is the information based on data or opinion?
  • Is it descriptive of the past or predictive of the future?
• Does it have a testable hypothesis?
• Understand conventional wisdom: Test a specific investment thesis by doing your own research.
• Get the other side of the story: Read opinions that are contrary to yours.
• Respect the data: “Charts, tables and numbers are a good place to start for corporate results and economic data. Always check the primary source when possible.”
• Turn off your political bias: “Be wary of commentators who have political agendas.”
• Develop your own framework: Before reading the news, establish your own view of the markets or “the media will force a view upon you.”