SUNDAY, JULY 18, 2010 PERSONAL FINANCE


Info overload is a drawback for investors


by Bob Frick


f you’re thirsty for financial news, you have plenty of gushing media fonts from which to drink. Consider the most popular fire hose of financial info: CNBC. Switch on the channel and at any given moment you may see four wonks expounding, three tickers streaming, two hosts a-hosting and exchange rates for the Indian rupee. And the hundreds of sources spewing financial factoids on the Internet can be equally overwhelming. Does this information help us make better investment choices, or does it just fool us into thinking we can? It appears that the wiring in our brains enjoys the stimulation but processes it poorly. Even though you might think you’re absorbing it all, there’s no way you can take in everything at once, says Daniel Simons, a cognitive psychologist and author, with Christopher Chabris, of “The Invisible Gorilla: And Other Ways Our Intuitions Deceive Us” (Crown, $27). “Attention is inherently selective — we can only take in a thin slice,” Simons says. Absorbing so much information is difficult, and often it can’t be processed properly. Chabris says the mind has a tendency to equate information, such as facts, with knowledge (expertise), which gives you “a tremendous illusion of knowledge.” This faux knowledge becomes dangerous if used as a basis for trading securities. For example, in one experiment conducted by behavioral economist Richard Thaler and some of his colleagues, the subjects managed an imaginary college endowment consisting of two mutual funds. They could choose how often they received information about fund performance and how often they could trade. The experiment simulated 25 years of investing. The results revealed an information paradox:


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Less can be more. Participants who received information once every five years, and could trade only that often, earned returns that were more than twice those of participants who were updated monthly and could trade that frequently.


One of the endowment’s funds simulated a bond fund, and the other mimicked a stock fund. Given that a stock fund is more volatile, its frequent dips often caused participants to panic and bolt to the less volatile but lower- performing bond fund. Those who received five-year updates were spared the pain of short-term dips. They received long-term


Health-care answers are just a click away


by Kimberly Lankford


Q: What kind of information does the new HealthCare.gov Web site provide?


TIM GRAJEK FOR THE WASHINGTON POST


return data, which were much less volatile, so they were more likely to stick with the higher- performing stock fund. Here’s another twist information hogs should consider: We tend to put too much stock in information we “discover.” This tendency has been shown in experiments with medical personnel who were given either complete data on a patient’s case or partial data on the same case, with the option to uncover more. After the additional facts became known, everyone had the same info. But those who had done research were more influenced by it when making a diagnosis. Chabris admits that he fell victim to the same tendency. He became interested in biotech companies that were developing drugs for mental disorders, and he began searching for


investing clues in obscure journals. “It was like a treasure hunt,” Chabris says. “But if someone had handed me the same information, I wouldn’t have been nearly as excited.” Only when researching his book, he says, did he realize that he’d fallen for the bias. So what’s the cure for information overload?


Money manager Bo Billeaud of Lafayette, La., says he made a new year’s resolution to turn off financial-news networks and focus his investing energy on studying long-term trends. Billeaud thinks back to when we had “no Internet, no CNBC, no day traders and no minute-by-minute updates announcing the arcane and meaningless.” And, he says, “Guess what. No problem.”


— Kiplinger’s Personal Finance


A: The U.S. Department of Health and Human Services’ HealthCare.gov makes it easy to learn about all your personal health insurance options. The site, created in just the 100 days since the health- care overhaul law was passed, was launched July 1. After you enter answers to a few questions (such as your state, age range and health status), the site immediately lists all of the private insurance plans in your area, as well as public programs you may qualify for — such as the new Pre-Existing Condition Insurance Plan (the high-risk pool created by the new legislation), any existing high-risk pool in your state, the Children’s Health Insurance Program and Medicaid — with detailed information about coverage and eligibility criteria for each program in your state. The site also explains the


new rules for covering adults younger than 26 and laws governing job-based health coverage (and protections if you lose your job or exhaust your COBRA coverage). And it provides links to hospitals and health-care facilities that offer free or below-cost health care to low-income people. This is the first time that


all of the public and private options have been listed in one place and


personalized, which was a major undertaking, because some health-care programs are national, some state-based and some local. The government used its muscle to gather comprehensive information about the private health insurance programs, which had been difficult to navigate in the past. The site includes more than 1,000 insurance companies with more than 5,500 plan offerings. Type in your Zip code, and you’ll see a list of each company offering health insurance in your area. Click on “View Plans” next to an insurer’s name to get a list of plans you can buy from it. You’ll also see links to the insurer’s list of services covered, provider network (with the insurer’s tool to check for your doctors), drug coverage and more information. HealthCare.gov is a great


first stop for anyone who is searching for health-care options. But you’ll still need to explore further to do a comprehensive search for health insurance. To get price quotes based on your specific health condition and to buy a policy, you can go to eHealthInsurance.com, contact a local health insurance broker (you can find some at www.nahu. org) or contact the insurer directly.


— Kiplinger’s Personal Finance


More from Kiplinger Go to www.kiplinger.com for more analysis.


As Microsoft stumbles forward, is it a good idea to have its head in The Cloud?


people aren’t interested in its misery — certainly not in this week of obsessing over Apple. The company that once


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defined much of personal computing has spent the first half of 2010 suffering indignities large and small. Key executives behind some of the company’s more successful recent efforts have announced early retirements; its unimpressive new Office 2010 software has seen ho-hum sales; and the stock market now values Apple more than Microsoft. At a speech that kicked off


Microsoft’s Worldwide Partner Conference in the District on Monday morning, chief executive Steve Ballmer tried to put a positive spin on things. But a look at three topics discussed in Ballmer’s speech and highlighted in product exhibits at the Washington Convention Center shows the kind of trouble the Redmond, Wash., company finds itself in. In the interest of being nice,


ROB PEGORARO Fast Forward


let’s get the worst part out of the way first: mobile devices. In no other market does Microsoft look more lost at the plate. Back in February, Microsoft publicly abandoned its Windows Mobile operating system when it announced that it was developing a replacement, Windows Phone 7, that wouldn’t work with any hardware or software shipped for that older platform over the past decade. Would-be buyers of


Windows-based phones could only have been more confused two months later when Microsoft unveiled a different, equally incompatible line of smartphones under the Kin brand name. Was this the real hope for Microsoft’s mobile


Problems with Verizon’s DSL service


Q: Verizon DSL has been up and down for two weeks in the Springfield area. Is it just me, or is there some bigger issue going on here? A: In this case — as with a similar pattern of outages in Georgetown a former colleague complained about two weeks ago — Verizon’s problem only starts with spotty service. The company also doesn’t give individual customers an easy way to see if it’s just them suffering, their block or an entire neighborhood. Unlike most Internet providers, Verizon no longer maintains a system-status page on its site that users could check — presumably, with a smartphone or a borrowed computer elsewhere. But it hasn’t taken down its former status page (verizon.net/ systemstatus) either, leading customers who find it from a Web search to think that Verizon has “Nothing to report.” Spokesman Harry Mitchell wrote in an e-mail Friday afternoon that the company was “looking at reinstituting” a system-status page but didn’t have any details on that. (As for the Springfield situation, he said


Verizon had “nothing major” in the area but volunteered to contact the reader who had e-mailed earlier that day.)


I tried to buy the DTVPal DVR you reviewed last year, but Dish Network doesn’t seem to sell it.


Here’s another case of poor site maintenance — the link for this digital video recorder on Dish Network’s site goes nowhere. Dish spokesman Marc Lumpkin e-mailed that Kmart sells this device, which records over-the-air digital TV broadcasts in high-definition. (Sears once did also but no longer lists it online). Meanwhile, another manufacturer, Channel Master, now sells its own version, the CM-7000PAL.


Rob Pegoraro attempts to untangle computing conundrums and errant electronics each week. Send questions to The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or robp@washpost.com. Visit voices.washingtonpost.com/ fasterforward for his Faster Forward blog.


icrosoft has been having a lousy year. And the worst part of it may be that


efforts? Evidently not: In July, less


than two months after the Kin One and Kin Two debuted in Verizon Wireless stores, Microsoft terminated the entire project. Meanwhile, Apple’s new iPhone 4 — reception issues and all — and the latest crop of Google Android-powered smartphones have already vaulted past Windows Phone 7’s promised features with such added capabilities as videoconferencing. The picture isn’t brighter in


tablet computing. Back in January, Ballmer used part of his Consumer Electronics Show keynote to talk up “slate computers” — small,


touch-screen models running Windows 7. Three weeks later, Apple introduced the iPad, which has since sold fantastically well. Meanwhile, HP — the company whose prototype slate Ballmer displayed at CES — seems to have quietly dropped that effort and looks far more likely to ship a tablet running the webOS


software of its newly acquired subsidiary Palm. At WPC, however, Microsoft seemed determined to plow ahead with the same slate vision as before, despite historical evidence of its riskiness (anybody remember the “Ultra Mobile PC”?). Processing power and battery technology have advanced since that venture flopped in 2006, but it’s still difficult to see how a Windows 7-based slate will outperform tablets based on such mobile operating systems as Android, webOS and Apple’s iOS. Microsoft seems better positioned in the area that made up most of Ballmer’s talk: “cloud computing.” This is the idea of moving your applications from individual desktops to Web-accessible servers that allow you to be productive and creative from anywhere and on any device with access to the Internet.


Some of the most public cloud-computing successes have come from Microsoft competitors like Google, but Microsoft is no slouch here. Its


Hotmail Web service, for instance, still has more users than Gmail, its Bing search engine is providing Google with some respectable competition, and Microsoft has begun moving such core properties as Office to the Web as well. But Microsoft is far more


invested in traditional, disk-bound software than the likes of Google, and so it has a tougher job moving to The Cloud. (Ballmer referred to it as a monolithic, anthropomorphized entity so many times that I feel compelled to capitalize that phrase.) That work is made harder still


by its Internet Explorer browser’s poor support for modern Web standards used by current and future cloud applications. The upcoming IE 9 should be far better — but Microsoft will first have to coax customers who have held back on earlier IE upgrades to jump on this one. (Many companies still haven’t dumped the horrifyingly obsolete IE 6.) It would be unwise to bet against Microsoft’s ability to


succeed at cloud computing. But success here could come at a different price: Cloud services, by their nature, don’t dominate people’s computing experiences. They flit on and off the screen as you go from device to device. You may not even know or care what cloud operating system powers the Web application you use — a key point of cloud architectures such as Microsoft’s Windows Azure, Amazon’s AWS and Google’s App Engine is to let outside developers focus on the parts of their software that their users see and use. The risk here for Microsoft


isn’t that it will stop making money or lose massive amounts of customers. It’s that the company that once had people lined up at midnight to buy copies of a new release of Windows will become just another utility whose continued functioning draws little notice or praise from day to day. robp@washpost.com


Living with technology, or trying to? Read more at voices. washingtonpost.com/fasterforward.


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