Originally published: October, 2004 (Phillips, Hager & North Investment Funds Quarterly Report). Context of the article: There's more investment information on the Internet and in the press than ever before. It's overwhelming. This article tries to help the individual investor be more productive with the time he/she devotes to investment reading.

Let's face it, we're all media junkies. It takes different forms, but we all have our vices in this regard. Mine is the statistics page in the sport section. I can't eat my cereal in the morning without having it in front of me. Why I need to know how many earned runs Roy Halladay gave up last night, or what Steve Nash's shooting percentage is, I'll never know ... but I do.

Many of us are hooked on the financial press and, as a result, we get most of our investment information from the newspaper, the Internet or the specialty cable TV channels. In light of this dependence, it's useful to pause once in a while and think about how we use it. Before I make some suggestions as to how we can be better media users, let me make a few observations.

The media reports on what has already happened. Economic statistics, corporate earnings, market summaries. In all cases, we are looking backward. Investing, on the other hand, is all about looking forward.

A headline or sound bite does not always reflect the true story. For example, there are all kinds of reasons why a company's reported earnings do not reflect its actual situation - write-offs, increased shares outstanding, asset sales, a turnaround in progress. The earnings figure provides the headline, but there may be more to the situation, and the press often doesn't have the time or space to flesh out the story.

Reporters and copywriters, like all of us, have an urgent need to determine cause and effect. This provides a storyline. The problem is, the media is too liberal in linking outcomes to specific events. Newspapers are littered with lines that imply some particular knowledge or irrefutable relationship: "The dollar went up because ... "Markets were down as a result of ..." The investment world is way too complex to be explained by a simple statement of cause and effect.

The media can contribute to our hindsight bias. The term "hindsight bias" refers to the tendency to deny the uncertainty of the past. Events that happen will be thought of as having been predictable. Conversely, events that did not happen will be thought of as having been unlikely. In other words, with perfect hindsight, we are likely to overlook the uncertainty we faced at a time in the past.

A perfect example of this is the technology bubble of the late '90s. The consensus view at the time was: The Internet is revolutionizing the way we do business; computer-based productivity is changing, or perhaps even eliminating, the normal business cycle. The view today (with the benefit of hindsight): Those pronouncements were ridiculous. We knew it was overdone.

It's human nature to suffer from hindsight bias, and members of the media are human. Unfortunately, overlooking past uncertainties can get investors in trouble, because it breeds overconfidence. To be good investors, we must be intellectually honest with ourselves. We have to know our strengths, but we also need to be aware of our weaknesses.

When momentum builds on a news event and the quantity of coverage picks up, it becomes more difficult to find opposing views. Whether it's Nortel, Conrad Black, China or rising oil prices, a story can take on a life of its own. As a result, the reporting can become quite imbalanced. A majority of the reports and articles will be focused on why something happened and why it will continue in the future. A current example is the coverage of oil prices. The reporting is overwhelmingly focused on why prices are going to stay high, or go higher. Sure, there are some counterpoint articles or columns, but they are buried under the weight of words that reinforce the current trend.

As the name of this column suggests, one of the biggest challenges investors face is managing the information flow. Educating ourselves is not about absorbing the greatest volume of information possible. It's about culling out the things we need to make good investment decisions, and ignoring the noise- the stuff we don't need. In the face of this challenge, there are a few things you can do to make yourself a better consumer of business information.

• Don't read or listen to anything that tries to explain what the markets did this morning or yesterday or last week. Short-term market moves are random and should have no place in your decision-making process.

• Use movements in a company's share price to gauge how meaningful a news story is. If the headlines make it out to be a big event, see if investors interpret it the same way (i.e., the share price goes up or down). If there's a disconnect between those two interpretations, then there's probably more (or less) to the story than the headline suggests.

• Don't allocate all of your business/investment reading time to the newspaper. There are all kinds of excellent publications and websites out there. I think the business and finance sections of The Economist provide an excellent overview of what's going on around us (even my wife, who finds the publication too right wing for her tastes, reads it because of the calibre of writing and analysis). There are terrific websites from firms that publish their research on a regular basis. Bernstein has an excellent array of articles on its website (www.bernstein.com) or you can read Bill Gross's musings every month on the Pimco website (www.pimco.com) ... how good is that? And of course I have to put in a plug for the articles we produce and post on www.phn.com.

• With some of that reallocated time, give yourself a regular dose of religion on long-term investing. Perhaps every three to six months, (re)read something like The Essays of Warren Buffett, or Extraordinary Popular Delusions and the Madness of Crowds (one of Art Phillips's favourites). These kinds of books are great reads and give you an appreciation for how unimportant the markets' short-term zigs and zags really are.

• If a news event becomes a major media focus (i.e., multi-page coverage every day), make a conscious effort to find the counterpoint, and if you find it, linger over it longer. I don't mean to suggest the media herd won't be stampeding in the right direction, but by getting swept up in the momentum, an investor can sometimes miss changes to a situation, and as a result, miss terrific investment opportunities. One of our retired partners, Peter Guernsey, used to say, "When a stock is beaten up, you don't need to spend time looking for the warts - they're easy to see - it's time to go looking for the positives."

• Cut out the middleman. Whenever you can, try to get your information straight from the horse's mouth (i.e., a company CEO or CFO), or at least from someone who is close to the front lines (such as an industry analyst or fund manager). There are lots of well-informed reporters and commentators out there, but they don't have the time or background to consistently get to the essence of a situation. Today, cable TV stations and the Internet give us more access to the front lines than ever before. For example, ROBTv interviews executives and industry experts throughout the day (you can find a daily schedule on its website or on page B2 of the Globe and Mail).

If you are a true media junkie, none of these suggestions will enable you to kick your habit, but they may help you become a controlled user.