Filter the noise
Weekly 07 2025 + Top 5 February
On the one hand, as an investor, you need to stay informed about what’s happening in the world. On the other hand, many so-called important news stories are often nothing more than noise.
Right now, I’m thinking of the constant news stream surrounding Trump. Hopefully, that will die down soon. The endless overanalysis of these matters adds nothing to our investments.
As value investors, we have an escape: we can simply focus on our companies.
Some believe that investing through computers and algorithms is also a solution, especially given the power of AI that we already see today. The problem, however, is that computers still have to be programmed by humans. Moreover, AI learns from historical data—data that contains errors and sometimes reflects odd phenomena, which were once triggered by algorithms and then will only be reinforced.
For example, the stock of Herzfeld Caribbean Basin Fund once rose by 15% without any news about the company. Why? Because its ticker symbol is CUBA. When Fidel Castro passed away, the word “Cuba” appeared so frequently on social media and in the news that computers, trading based on certain algorithms, drove the stock higher.
With a market capitalization of just $40 million, that may not have seemed too crazy. But did you know that Berkshire Hathaway also rose a few percentage points whenever actress Anne Hathaway released a new movie? Back then, Berkshire was worth a modest $400 billion—today, that number is 2.5 times higher.
I ask myself: why rely on all these technical and complex investment strategies when it can be so simple? Find a company that generates profit and strong cash flows, and buy it at a low price.
Where Benjamin Graham, Warren Buffett, and Philip Fisher once had to invest enormous amounts of time gathering information about companies, today, we face the opposite problem. As investors, we are bombarded with so much news daily that the biggest challenge is dealing with information overload.
Separating the wheat from the chaff is the real test of our time. AI can help with that, but we’re not yet at the point where we can fully rely on machines.
I call all these (for us) irrelevant reports “noise.” And noise should be filtered out as much as possible.
Articles and updates this week
Company news comes in fragmented; often, we receive preliminary trading updates, while full figures are only available later.
This week, we received an update from X-Fab, suggesting that the worst is now behind us.
On Tuesday, we published the third lesson of our introduction to value investing: Being a Value Investor.
You’ll find Bellway’s trading update below under Short News.
This month, the Top Five Buy-Worthy Stocks sees some changes, as Vicat and Manitou rose by 19% and 24%, respectively, over the past month, causing them to drop out of the list. Find out below which stocks have been added.