What Google Maps Can Teach Us About Investing

Maps gather information to produce paths.

Markets gather information to produce prices.

If you’re like me, you use Google Maps constantly. You enter your starting point and destination. And just like that, several routes appear.

Ever wonder how that works?

Based on your location inputs, mapping technology gathers real time information to produce paths. Typically, two or three path options are presented. Most people choose the fastest route!

It is also convenient that the chosen path updates in real time while you are enroute to your destination. If there is an accident or a slowdown up ahead, the map will adjust accordingly and sometimes offer an alternate path. Recently, my map even produced a “Police up ahead” notification! That was a helpful and timely warning!

Like Google Maps, markets continuously gather information, knowledge, and expectations not to find routes, but to set prices for investment securities (stocks and bonds). When new (current) information becomes available, the prices adjust to reflect the information. 

Think of the market as a giant information processing machine, continuously updating in real time. According to Dimensional, in 2024 the average daily global equity trading volume was $836 billion. That’s millions of trades by buyers and sellers every single day. This trading activity sets market prices for global investment securities.

This does not imply that current market prices are “right” or perfectly efficient. However, we can accept them as "fair" - that is, the best approximation of the right price. 

In other words, trying to be a hero by forecasting and picking stock winners (in advance) is like competing against the collective wisdom of the markets. That’s a tall order, and there is little compelling evidence that any one individual can consistently and reliably outguess markets!

Markets work. Embrace market pricing. Do not try to outguess the market.

Markets are complex but they’re not unknowable. If you want help navigating your investment journey, let’s talk.

Schedule a Free Assessment.

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The foregoing content reflects the opinions of TwoTen Planning and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as financial, legal, tax, or investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. All investing involves risk, including the potential for loss of principal. There is no guarantee or assurance that diversification, strategies based on Nobel prize-winning research, or any investment plan or strategy will be successful.