Investing: The Last Liberal Art (Columbia Business School Publishing)

by Robert G. Hagstrom

A communication system consists of five parts: 1. An information source, which produces a message or a sequence of messages. 2. A transmitter, which operates on the message to produce a signal that can be transmitted over the channel. 3. A channel, the medium used to transmit the signal from the transmitter to the receiver. 4. The receiver, which reconstructs the message (the inverse operation of the transmitter). 5. The destination, the person for whom the message is intended. What is the communication system of investing? Our information source is the stock market or the economy; both continually produce messages or sequencing of messages. The transmitters of the information include writers, reporters, company management, brokers, money managers, analysts, and anyone else who is moved to convey information: taxicab drivers, doctors, next-door neighbors. The channel might be television, radio, newspapers, magazines, journals, Web sites, analysts’ reports, and all manner of casual conversations. The receiver is a person’s mind, the place where the information is processed and reconstructed. The final destination is the investor who takes the reconstructed information and acts on it.