A massive increase in economic and financial information is adding to investor jitters and driving a shift away from long-term investing.
AMP chief economist Shane Oliver is arguing that the communications revolution is making 'things seem a whole lot worse than they really are', in his latest newsletter.
"we are now bombarded by economic and financial news on a continuous basis. Whether it’s on the TV via regular finance updates, numerous news and finance channels, websites and blogs, Twitter on a smart phone, it’s hard to escape," said Oliver.
"The trouble is much of this is noise - random moves in economic data more due to statistical aberrations than fundamental swings in the economy, second order economic data of no real significance, gyrations in share prices and currencies that reflect swings in sentiment on the day, and in Australia’s case constant chatter about interest rates."
Oliver added that the constant information bombardment is "likely making investors excessively cautious, which means they are less likely to take risks which will ultimately mean lower long term returns".
Instead, he suggests that that investors should consider turning down the “news” volume, refocus on investing for the long term, and remember that the best time to invest is when everyone is gloomy.
"In other words, follow the advice of Warren Buffet when he said 'get greedy when everyone panics, panic when everyone gets greedy'," concluded Oliver.
