Do Investors Have Too Much Information?
This problem is referred to as 'noise trading' (I believe Fischer Black was one of the first finance intellectuals to rigorously study this idea). The ways investors try to 'solve' the problem of financial decision making in the midst of noise often lead to anomalies that are the bane of neoclassical financial economists (but are a boon to their 'behavioralist' brethren). For example, one study Buttonwood cites found that American mutual fund managers tended to favor investing in companies where senior officers went to the same universities as they did. Obviously, this is a silly and simplistic 'solution' to a complex problem, but silly and over-simplistic heuristics are what human beings often gravitate towards in the face of complexity.
Buttonwood suggests that a better solution to the problem of noise trading would be to exercise discipline in financial decision making. Rather than (over-)reacting to the latest bit of news on the financial wires, take the information (usually, noise) with a grain of salt and base decisions in a more equanimous manner. Sadly, this is easier said then done.