How To Decipher a Signal from All the Noise

Posted On 21 January 2025

I have a confession to make. I don’t pay much attention to the news. Why? Isn’t that where one should look to find out what is happening? It’s been my experience that the news is mostly noise. If you are looking for a signal, which is what everyone is looking for, how do you find your signal?

Let me clarify what I am talking about when I mention both signal and noise. The signal is the information that is valuable, or usable for you. Noise is everything else – information that you don’t need, distractions, and even the chatter in your head.

Identifying Noise

Most of the information out there is noise! I would estimate that 99% is noise. The other 1% is what is useful for you. That is not to say that all the information is bad. We could memorize a dictionary, but do we really use all the words that are in there?

The concept of noise in this post is geared towards helping you with your finances and life. As you will see, these concepts can be applied to other aspects of life as well.

Good Advice (for someone else!)

All your family members have advice for you. Ask a stranger on the street for an opinion, and you’ll find that they have one for you! In fact, opinions are like noses – everyone has one!

A great filter for advice given to you is to ask yourself, “Who said it? And why would they say it to you?” Are they a salesperson trying to make a sale? Maybe they’re a relative who doesn’t want to see you do something they are too afraid to attempt. Has the person giving the advice done what they are telling you about? Or are they in the process of doing it?

On the topic of advice, you should try to figure out what game the person is playing. Good investing advice from a day trader’s perspective would be drastically different from a long-term investor. Make sure that the advice you follow applies to what you are doing!

Digital Distractions

A modern way that noise has crept into our lives is with our technology. Smart phones are a very powerful way for us to communicate and get information. They are a double-edged sword, though. Notifications can come in all day long! That is only part of the problem.

Social media can consume your whole day if you let it. The platforms are designed to keep you on the platform. The content is never-ending. We can just go from one video to the next automatically, or we can doom-scroll our life away without realizing it.

Email is another thing that can take up more time than it needs to. While some email is important, a lot of it is not all that vital to our day. In our quest to cut down on the noise in our lives, email is often an area that deserves some attention. Now, let’s take at noise and how the deep trends interact with each other.

Trend vs Surface Chop

It is said in the investing world, “The trend is your friend.” Let’s look at the Atlantic Ocean. The Gulf Stream is the current that flows from Florida, up the east coast of the US to Canada, then past Iceland on its way to the British Isles. This clockwise current is quietly, steadily moving all the time deep below the surface. That is the trend in the Atlantic.

Being humans, we tend to only see the surface chop. On windy days there can be sizable swells. The waves can be larger than normal. This is only the ocean reacting to the weather conditions. Yes, Surface conditions can sink ships. It doesn’t matter how extreme the weather conditions are, the Gulf Stream still flows the same way.

News, politics, celebrations, and depressions only contribute to the surface chop. Economic trends tend to stretch out over decades. For example, look at national debt. While the US is leading the charge, so many other countries have staggering amounts of debt. This is not something that can go away with something like an election.

On a personal level, we can find our financial trend by looking at our net worth. It takes time to rack up debt. By becoming intentional about our finances, we can change our course. Like turning a ship, though, it takes time. We have habits that have helped us get to where we currently are. Changing those habits takes time and effort because we will be “going against our trend”. Things may feel wrong. That’s normal. In time, your new habits will become comfortable for you.

Information Overload

We live in the information age. It wasn’t that long ago that information was valuable because it was scarce. Now, we suffer from information overload! Finding good information can be like finding the proverbial needle in the haystack.

Modern society has been so productive and innovative that we have a plethora of options. To explain this a little easier, let’s talk about ice cream. Over 100 years ago, ice cream was a novelty. Who cared what flavor it was – it was ice cream! Fast forward to Baskin-Robbins with their 31 flavors. That was great until it was time to choose what flavor to pick. Now, we can go to ice cream parlors where the person behind the counter can mix us a personalized concoction!

When there are so many choices, we can experience the paradox of choice. We like having choices, but the more choices there are, the harder it is for us to decide. As a work around, some of us find that even with a lot of choices we ask for the same flavor every time!

An overabundance of options becomes noise and can lead to analysis paralysis. We think over the options so long that we exhaust ourselves, or we take so long to make a decision that the opportunity passes us by before we take action.

Cognitive Noise

Having to make too many decisions can lead to decision fatigue. This is only exacerbated by our mental chatter. We can have arguments in our own head! Even after we finally decide on something, we can question if we made the right decision.

Overthinking takes energy, time, and interferes with our focus. Believe it or not, I have spent some time pondering whether or not I have been overthinking! Too much happening in our head is another source of noise for us. When we are busy thinking about something else, we cannot pay attention to what is happening to us in the current moment.

Signal vs. Noise: Strategies for Finding What Matters (and Noise Reduction)

It does not matter if we can identify noise if we are not able to both reduce the noise and learn how to find the information that matters to us. Here is a list of strategies to do this.

Defining Your Important Signals – Know what you are looking for. When we have dreams and goals that we are moving toward, we have a compass to guide us. Is the information we are looking at going to help us accomplish our why?

Who Said It, and Why? – I use this filter constantly! The person sharing information with us could be a salesman trying to make a sale. Maybe it’s a family member who lives in fear and simply does not want us to get hurt. The information could come from someone who has done it, or they could be currently in the process of doing it.

Information A La Carte – A person can be an expert in one area and a mess in another area. So what! Acknowledge that they are not perfect and use the information they have in their area of success. Our goal is to learn from others, not to copy them. I treat information like a buffet.

Digital Minimalism – Are we communicating, learning, or working with our tech? Great! Can we step back from our gadgets? Remember, we are the one in charge of our life, not electronics. Learning to do more in the real world can be beneficial.

Information Diet Planning – When you find a couple of reliable information sources, stick with them. Extra information will just be noise. Learn to turn it off.

Compare and Contrast – When you hear something new or different, ask yourself if it makes sense. If you follow this advice, could it harm you? Is there other information that backs up what you just learned?

Environmental Design – As I said earlier, I don’t watch the news. Still, I hear bits and pieces of what’s happening as I live my life. If it gets bad enough, news will reach me! Some things we can do to cut down on the distracting noise is to put our phone on silent. Maybe it needs to be in the next room. As we become intentional about our life, we can look around at our home and work environment and see what distractions we can minimize.

Cognitive Techniques – After I make a purchase, I stop shopping for that item. That may sound silly, but I used to keep shopping. Why? To see if I really got a good deal. Use your energy for better things.

Mindfulness – Learn to be present and intentional with what you do. When we are living in the present, we find that we are not worrying. We are not stressing about the future. We are present in the now. To learn more about this, I highly recommend the book, The Power of Now.

Prioritizing – Separating out what is important from what is either not important, or not important for you. The small trivial tasks can suck up our day. Those are another source of noise in our lives. To limit this type of noise, we need to learn to keep the main thing the main thing.

Finding Your Signal

This is the small 1% that is valuable to you. You are the only one who can separate your signal from all the noise. It gets easier with practice. Notice that I said easier, not easy. Noise can be sexy! It can be enticing! The trick in deciphering the signal from the noise is having a strong why. Secondly, limit who or where you get your information. Finally, become intentional and prioritize things and people in your life. Becoming able to find a signal in all the noise is a skill that one needs to be unstoppable!