65-Day Academy · Day 37 · Psychology & Biases
Noise vs Information — Filtering the Feed
The taxonomy
Information changes forward expectations: earnings, guidance, real regulatory shifts, balance-sheet events. Noise changes nothing structural: price movement itself, opinions, price targets, "insider whispers," social sentiment on a no-news day. The test is brutal and simple: "if this were false, would the business's 5-year cash flows change?" No → noise.
The processing rules
1) Price movement is NOT information about cause — a 5% drop might be one fund's redemption, not knowledge. 2) Opinion has no evidentiary weight, including from experts (track records are public — most are bad). 3) Match the news to your HORIZON: a day trader needs intraday flow; a position holder needs quarterly fundamentals — each should ignore the other's feed. 4) Schedule consumption: news on YOUR schedule, not the feed's.
What you'll practise
Which of these are genuine information for a 6-month position holder? (Select all that apply)
15 XP in the app · intermediate
Sources
- Noise: A Flaw in Human JudgmentKahneman, Sibony & Sunstein
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All lessons are for educational purposes only and are not individualized financial advice, a recommendation, or a solicitation to buy or sell any security. Options involve substantial risk and are not suitable for every investor.