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Information Gatherers vs. Information Analyzers
Several months ago, I wrote a blog post about how in today’s hyper-competitive business environment, those who win are only marginally better than their competitors. In this blog I want to describe what that marginal advantage is and how the “winners” in business maintain it.
Prior to the invention of the internet, gathering information was a slower and more manual process. Now it seems we suffer from having too much information, most of which is neither useful nor beneficial. Having access to information is great. But if you’re an investor trying to make an investment decision, you have to be able to determine what information is important and what information can be ignored. For anyone who has ever invested in any type of professionally managed investment fund (mutual fund, private equity fund, venture capital, real estate investment fund, etc.) it’s important to understand how professional money managers use information to (hopefully) produce profitable returns. As such, the two most important questions you should want to know are “what enables this manager to identify outperforming investments?” and “what makes this manager smarter than other managers?” If, say, two managers have access to the same information, how can either manager have an advantage over the other?
