Spies, Noise and the Investor

Numbers 13, News, and Noise

In Numbers chapter 13 there is an account where Moses sent twelve spies into the land of Canaan. Why did he do this? Verses 1-2 of the chapter give us the reason: “The Lord spoke to Moses, saying, ‘Send men to spy out the land of Canaan, which I am giving to the people of Israel. From each tribe of their fathers you shall send a man, every one a chief among them.’”

The assignment was from God, but it came with a promise from God that he was giving them this land. Another interesting thing about this is that God wanted chiefs to be the spies. These were not espionage experts, they were leaders. There are, however, only two of the twelve spy names widely known by the student of the Bible: Hoshea the son of Nun and Caleb. Moses called Hoshea the son of Nun Joshua. (Numbers 13:16b)

After they returned, ten of the spies came back with noise. They said, “we seemed to ourselves like grasshoppers, and so we seemed to them.” (Numbers 13:33b.) Here is the problem: their vantage point. They looked at themselves and said, “The enemy is larger and stronger than us.” They then stepped into the sandals of the Canaanites and said, “They think like we do! We are grasshoppers who will be crushed.”

Ten spies (83% of the task force) made so much noise that the children of Israel had to wait another forty years to enter the promised land. This was long enough for the doubters to die, but not so long that their children and grandchildren would be excluded. This is revealed in Numbers 14. Noise was disastrous for a sizable majority of the adult population. There is a spiritual lesson here: be careful what voices you believe and follow when it comes to your life here and your future after death.

However, there is also another lesson we can gain from understanding noise in our world today.

How Noise Applies to Investors

It doesn’t take long for you to see noise in the land of investing. Noise is the sound of many ill-informed news outlets, pundits or “analysts.” These spies see the darkness and storms on the horizon and each news cycle is another opportunity for pessimism. They often overwhelm the thoughtful commentators and advisors in number and noise.

If you want to make decisions, like Caleb and Joshua, then you need both information and wisdom. The information should be considered, but you should filter out the noise. Noise, by the way, is usually short-lived and based on emotions rather than careful thinking.

More information for investors about “noise” can be found at a Leelyn Smith Wealth Management and at Investopedia. Please note that my mention of Leelyn Smith is not a recommendation to use their services.

“What is noise? The term noise was developed in 1986 by noted economist Fischer Black, who stated that ‘noise’ should be distinguished from “information” and that more trading occurred due to noise rather than evidence. Noise is reactionary trading driven by news and information that is often non-fundamental and speculatory in nature. We view trading on noise as the opposite of sound investing.” – Leelyn Smith Article

“The definition is often vaguely stated throughout the literature though it is mainly intended to describe investors who make decisions to buy or sell based on factors they believe to be helpful but in reality will give them no better returns than random choices.” – Investopedia

“Noise traders are basically the opposite of the smart trader.” – WallStreetMojo Video

Five Minute Friday

This post is part of the weekly Five-Minute Friday link-up.

All scripture passages are from the English Standard Version except as otherwise noted.