By Pieter Hundersmarck.
German-born Johann Carolus (1575 to 1634) was the publisher of the world’s first newspaper, first printed in Strasbourg in 1605, with the catchy title of “Relation aller Fürnemmen und gedenckwürdigen Historien”, or “account of all distinguished and commemorable news”.
Although we wonder if Carolus would define today’s anxiety-laden diatribe as distinguished or commemorable, the publishing of newsworthy content is big business.
Like any big business, publishing requires funding. Newspapers report events through a commercial lens. To generate sales, stories must be reported in a manner that attracts attention and caters to the zeitgeist of their readers. That commercial incentive favours coverage that is frequent, urgent and emotional, and, as we will see, this is precisely where noise comes from.
For investors, the cost is measurable. In a study of more than 66,000 US brokerage households between 1991 and 1996, Brad Barber and Terrance Odean found that the fifth of households that traded most earned a net return of 11.4% a year, against 17.9% for the market. The media did not place those trades; the investors did. An investor’s own reaction plays a decisive role, but that reaction rarely starts in a vacuum. It is usually triggered by a headline, and the headline is written to provoke one.
Biases: do you know the agenda of the writer?
“Get your facts first, then you can distort them as you please.” - Mark Twain
In no segment of the news publishing industry is the range of distorted media incentives clearer than in the world of investments. Fear and greed play enormous roles, and millions, often billions, of dollars are on the line.
We interpret the world around us based on our worldview, and we gravitate to publications that share this view. Every publication carries a slant, but it is rarely a simple matter of left or right. The Economist is classically liberal, favouring free markets and free trade, a stance easily misread by readers for whom “liberal” means left-leaning. The Financial Times is pro-market and broadly centrist. The Wall Street Journal combines a largely straight news section with a conservative editorial page, while The New York Post is a populist tabloid with different incentives from all three. Beyond political slant there is national bias, as every outlet sees the world from its home market; commercial bias, towards advertisers and the industries a title depends on; and the gap between news reporting and opinion pages within the same publication.
The biases in today’s news landscape require careful interpretation, and today’s investors need to be aware of the agenda of their news sources before they choose to agree or disagree with the analysis provided.
For example, take the U.S. Bureau of Labor Statistics release of 4 September 2026, which reported that 162,000 jobs were added in August, well above the average monthly gain of 31,000 over the preceding twelve months, while the unemployment rate held at 4.1%. Depending on the editor, this can come out as “Hiring rebounds sharply as job market shakes off summer stall” or “Unemployment stuck at 4.1% despite hiring bounce”.
Both these headlines contain kernels of truth, but suffer from bias by selection and omission. One effective way of combating the bias is to rewrite the headline in a balanced way, such as “Hiring picks up in August, while the unemployment rate holds at 4.1%”.
Interpreting content demands that we understand the source. Only when we are armed with the agenda of the writer can the appropriate perspective be applied.
An editor can express bias by choosing whether or not to run a specific story. Within a story, some details can be left out and others included to give readers or viewers a different impression of the events reported. Only by comparing news reports from a wide variety of sources can this type of bias be observed.
Differentiating between Noise and Signal
Bias shapes how a story is told. Noise is a separate problem: it concerns how often a story is told, and whether it matters at all. A perfectly neutral report can be pure noise, and a slanted one can contain real signal. What links the two is the commercial incentive described above
Beyond understanding the biases of the news, identifying short-term noise and separating it from signal is critical to achieving long-term investing goals.
Signal is well-researched, substantive information that has a long-term impact on an asset’s value. Signal should be appropriately interpreted, and used to price assets.
Examples of signal are large acquisitions, changing product lines, or societal and demographic changes that affect the addressable market for a company’s product. The introduction of electric cars was undoubtedly a signal to account for when investing in the automotive sector.
Noise is everything else. Noise consists of high-frequency, short-term news cycle phenomena with few long-term implications beyond the current quarter. One needs to look beyond the noise to see the signal. Brexit, for example, generated enormous news flow, most of it noise, yet beneath it sat genuine signal: lasting changes to the UK’s trading relationships, to sterling and to the valuation of UK equities.
A relevant real-world example of signal buried under noise is the continuing conflict in Ukraine. Since the Russian invasion in February 2022, mainstream media coverage has been high-urgency and hyper-focused on daily events: offensives, ceasefire talks and sanctions announcements. That daily coverage encourages short-term trading and headline-chasing, making it unreliable noise that leads to over-trading and market timing.
By looking past the daily coverage, one can discern the signals the war has produced, such as de-globalization and rising defense allocations. These are decidedly long-term shifts that can adjust allocations, for example by taking a more cautious view on countries that have benefited from globalization, or adjusting stock allocations to benefit from the rise in defense (and specifically drone and robotics-related) spending. The event is the same; what differs is whether the investor reacts to the coverage or to the consequences.
The investor and allocator must keep their eyes focused on signals
Three questions help to separate the two when a headline demands a reaction:
Does this change the long-term cash flows or risks of what I own?
Will it still matter in five years?
Is the move in prices larger than the change in fundamentals?
Signal allows investors to sidestep risk and size their positions appropriately.
Noise unfortunately causes many investors to react unwisely and wreak significant damage to their wealth in the process. An incorrect take on economic events, or a misunderstanding of the impact of noise or signal, can also cause undue caution in an investor’s portfolio, or undue risk-taking.
An investor’s long-term success depends on his or her ability to intelligently differentiate between the two. Carolus promised his readers an account of all distinguished and commemorable news. Four centuries later, the investor’s task is to decide which of it truly is.
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Pieter Hundersmarck is a Chief Investment Officer and Portfolio Manager with almost 20 years experience building investment capabilities for asset managers and family offices from the ground up, including asset allocation, philosophy, process, people and investment operations end to end. He was most recently CIO at a single family office based in Amsterdam, and has led investment strategies across listed equity, fund of funds, private equity and impact investments. He founded Walker Bay Capital Advisory in 2026 to advise high-net-worth individuals and families on their wealth and investment strategies.
