Information is freely available. It is everywhere, making it more difficult to know whether the facts are useful or where they lead.
For example, Yahoo has historical financial statements of every public company. Two decades ago, you had to ask companies to mail you hard copies. Twitter creates 200 billion tweets a year, but it barely existed a decade ago.
 A first step when dealing with any kind of information is to separate them into different categories.

Knowing how to use information to your advantage

Irrelevant information may provide small pieces of a puzzle that might increase your understanding of why things happen**.** For example, palaeontology offers insights about how things naturally grow too big for their own good, which has relevance in investing.
You may not use the information directly, but the information can help to understand your field better.

Irrelevant information, but gives insight into how other people think

Every field has interesting or entertaining information. It is useless but keeps you focused, and that makes it valuable.
For example, exposure to a field in the form of blogs or CNBC may be the reason to become interested in investing, making it some of the most important information. The trick is knowing when it is entertainment and when it should influence your actions.

Useless but usefully entertaining information

... but useful to someone whose decisions are relevant to you.
For example, long-term investors can benefit from learning how and why traders make decisions. Bubbles can destroy long-term investors, and bubbles are driven by traders. It means valuing information that doesn't directly mean much to you.

Information that is irrelevant to you directly

Permanent information teaches you what to do with expiring information.
Knowing that an investment's price fell may be out-of-date information. But knowing the long history and its impact is permanent information that will stay valuable.

Useful and permanent information

<ul>
<li>Useful information when combined with other data: Information is seldom useful by itself. It is part of a bigger picture. It is crucial to have a general idea of the scene to know how the information slots into the larger picture.</li>
<li>Irrelevant information in all circumstances: You will know it when you see it.</li>
<li>Information that requires immediate action: This is the rarest form of information.</li>
</ul>

Useful, irrelevant, and urgent information

When you find information that is important to you, ask: "Will I still regard this information as important a year from now? Five? Ten?" E.g. quarterly earnings are useful, but no one cares about 2010 earnings because they ceased to be useful.
Our default is to think that information will be useful forever, leading us into paying attention to what in hindsight was short-term noise.

Useful but expiring information

An 1890 Oxford entrance exam question read: “Give some account of the life of Mary, the mother of our Lord.” William Dawson, in his book The Quest of the Simple Life, writes what happened next: One bright youth, after a feeble sentence or two in which the name of Mary was at least included, went on to say, ‘At this point it may not be out of place to give a list of the kings of Israel.’ Here was something he did know, and it was something not worth knowing. I found that my boys had been educated much the same … with history; they could recite dates and facts, but they had no perception of principles. This may be a bigger problem now than in 1890. The amount of raw, accessible information we have is orders of magnitude more than it was 15 years ago, let alone 129 years ago. Yahoo has historical financial statements of every public company; 20 years ago you had to ask each company to mail you hard copies. Twitter spits out 200 billion tweets a year; it barely existed a decade ago. The firehose makes it easy to mirror the poor Oxford boy: since information is free and ubiquitous but adding context has a mental price, the path of least resistance is to know facts without a clue where they go or whether they’re useful. Michael Batnick wrote about his humble beginnings: “I assumed you could be successful by knowing just two pieces of data, price and earnings. I didn’t even earn the right to call myself a first-level thinker.” Some have four or eight or ten thousand pieces of data but end in the same spot. One step to fixing this is acknowledging different types of information. When you come across a piece of information – any kind of information – I’ve found it useful to bucket it into different groups. 1. Useful but expiring. Take quarterly earnings. They’re useful. But no one cares what Apple’s Q2 2010 earnings were anymore, because its usefulness expired. When finding information you find important it helps to ask, “Will I still consider this important a year from now? Five? Ten?” Expiring information can be useful. But until you ask how long it will be useful for you don’t know how to calibrate that usefulness. And I’ve found that until you ask the question you default to “this will be useful forever,” which is the innocent reason we pay attention to what in hindsight was short-term noise. 2. Useful and permanent. Knowing that an investment’s price fell may be expiring information. But knowing the long history of volatility and its impact on people’s willingness to take risk is permanent information that will be just as valuable in 50 years as it is now. Same with understanding incentives, biases, and the handful of fundamental factors that drive your industry. Permanent information is what teaches you what to do with expiring information. 3. Irrelevant to me but relevant to someone whose decisions are relevant to me. The “signal vs. noise” idea is smart. But investing is the art of figuring out how and why other people make decisions. And something I consider noise may be signal to other people. If an investor’s job is to size up and predict the actions of other people, then what other people consider signals could be useful information to me, even if I think the information is silly and irrelevant. Example: I don’t trade; I’m a long-term investor. But long-term investors can be ruined by bubbles, and bubbles are driven by traders. So long-term investors can benefit from learning how and why traders make decisions, which can mean appreciating information that doesn’t directly impact your own investing decisions. Ignoring information that doesn’t affect you but does affect people whose decisions affect you is most of why politics is so nasty. 4. Irrelevant but a window in how other people think, which is relevant in itself. Paleontology is not relevant to investing. But paleontology has insights about how things naturally grow too big for their own good, which is relevant to investing. Same for fighter pilots, which teaches us about personality traits, and George Carlin skits, which had Nobel Prize-worthy insight into human behavior. A lot of information goes in a broad bucket called “a tiny piece of the puzzle that might help me better understand why things happen.” You rarely use the individual parts, which makes it feel irrelevant. But as a whole it can make the specific information of your field easier to make sense of. 5. Useless but usefully entertaining. Follow Chris Rock’s career advice: “You can’t be anything you want. You can be anything you’re good at, as long as they’re hiring.” Implicit in this is that a good career may not be in the topic you find most entertaining. Which is unfortunate, because people do good work when they enjoy it. But there’s a solution: Every field has interesting/entertaining information that a rational practitioner would say “this is useless” but a reasonable one will say “Yes, but it keeps me engaged and that’s useful.” Examples in investing go by the names of chart porn, FinTwit, CNBC, and many white papers and blogs. I don’t watch CNBC now, but I never would have become interested in investing without teenage exposure to the flashing lights and fist-pounding of its hosts. In that sense it’s some of the most important information I’ve come across. The trick – a hard one – is knowing when information is merely entertainment and shouldn’t influence your actions. 6. Useful only when combined with other information. Interest rates rise. What next? Depends on what investors expected before the rise, what they expect to happen next, why they rose, who raised them, the level and kind of debt outstanding, the rise relative to interest rates in other countries, and so on endlessly. Few pieces of information are useful by themselves. They’re part of a puzzle where one piece only makes sense if all the other pieces are put together to show a bigger picture. And that picture often has so many pieces that it’s practical to rely on simple rules that give you a general idea of the scene. 7. Irrelevant in all circumstances. You know it when you see it. 8. Requires immediate action. The rarest information that exists.