In a World Deluged by Irrelevant Information, Clarity is Power

Eran Peleg, CIO August 22, 2018

This is the brilliant opening sentence of Yuval Noah Harari’s new book, 21 Lessons for the 21st Century. 

Sapiens, Harari’s first bestseller, focused on the past. Homo Deus, his second, investigated the distant future. Now, through a collection of essays, many of which are built on articles previously published in the media (the New York Times, Bloomberg, etc.), his new book sets out to examine the present.

The book not only focuses on what humanity has achieved, but also on where it might be going. It forces us to think on some of the essential questions we should be asking ourselves today. It covers a wide range of topics: religion, morality, terrorism, freedom, artificial intelligence, equality, nationalism, secularism, education, justice, Trumpism, universal basic income,… truly fascinating!

All these subjects are highly relevant for any investor as, taken together, they portray a picture of where humans and human society may be heading – and having a better understanding of this direction may lead to better investment decisions today.

However, in his opening statement, Harari makes a strong point that has implications not just for the content of our investment decisions, but also for the way in which they are formulated.

In a world deluged by irrelevant information, clarity is power, he states. In making investment decisions, having access to information is important -- however, this is true only as it applies to relevant information. In today’s world, we are flooded with information, and most of it is irrelevant. Not only does this irrelevant information not help us, but it may damage our decision-making process -- as it often blurs the situation at hand or causes major distractions. It is noise that prevents us from getting to the true essence of things. Unfortunately, most financial market participants, particularly non-professional investors, are therefore groping in the dark. In this reality, investors who have the experience and/or the ability to separate the wheat from the chaff and to see things clearly have a real advantage. Clarity is power.