Which investment news is worthwhile?

These days it is not much fun to read about the markets. So I think it’s important to keep a good sense of humor. On that note, today I share a light story from one of my previous email newsletters (you can sign up here).

Friend: I can’t believe it. The market was down big time.

Me: Yes it was. What are you going to do about it?

Friend: Probably nothing, but man, my portfolio is hurting.

And so I shrug. News should be about improving your decisions. Will you change your investments? Will you minimize risk? Instead, news frequently serves as entertainment, gossip, and discussion for small talk.

We’re inundated with stories so we have to focus our efforts. How can you tell which news is important? If you’re confused, then consider using the “Test of Three” that comes from Socrates.

The Test of Three (source of story)

In ancient Greece, Socrates was widely lauded for his wisdom.
One day the great philosopher came upon an acquaintance who ran
up to him excitedly and said, “Socrates, do you know what I
just heard about one of your students?”

“Wait a moment,” Socrates replied. “Before you tell me I’d
like you to pass a little test. It’s called the Test of Three.”

“Three?”

“That’s right,” Socrates continued. “Before you talk to me
about my student, let’s take a moment to test what you’re
going to say. The first test is Truth. Have you made absolutely
sure that what you are about to tell me is true?”

“No,” the man said, “actually I just heard about it.”

“All right,” said Socrates. “So you don’t really know if it’s
true or not. Now let’s try the second test, the test of
Goodness. Is what you are about to tell me about my student
something good?”

“No, on the contrary…”

“So,” Socrates continued, “you want to tell me something bad
about him even though you’re not certain it’s true?” The man
shrugged, a little embarrassed. Socrates continued. “You may
still pass though, because there is a Third test — the filter
of Usefulness. Is what you want to tell me about my student
going to be useful to me?”

“No, not really.”

“Well,” concluded Socrates, “if what you want to tell me
is neither True nor Good nor even Useful, why tell it to me
at all?” The man was defeated and left, ashamed. This is the
reason Socrates was a great philosopher and held in such high
esteem.

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