Dissemination of News from Lake Wobegon

I started out writing this post about how to do extensive research into an equity. It occurred to me that it would be disrespectful or rude to think that I knew the best way to research stocks. Did  you know there was a "Due Diligence Framework"? How can you top that....

So I want to switch gears and let you imagine a cross-section of a tree. I do my research working from the bottom up when I am looking for a company. Imagine that your focusing at the center of such a cross-section, each ring with its meandering path representing news and information about a company. Each news article you read or nugget of information you gather adds another ring around the core. A younger company, just like a tree, will have less rings, less information available. An older company has more rings, more information and popularity. Now take a cross-section across a truncating branch. Seeing the knot and its rings symbolize news generated from outside the company, or how you react to the company. News comes from the company itself. News comes from outside the company and information comes from our personal impact and reaction to the company.

Game theory 
Know Your Opponent. In the first three chapters of Seth Klarman in Margin of Safety he writes about the constraints the institutional investor is under. Adding into this mixed market are the latest social media sites that allow the amateurs, professionals, and ex-prop traders to share their resources.

What are the known facts? At what level is the information really understood. What does the average person think your going to do with that information? Not all participants are thinking at the same level.

Game theory teaches us that in any encounter most people only think about 2 steps into this process of what will the other contestant do. The game of gaming information.....

Disseminating the news for an equity
"In finance, the efficient-market hypothesis asserts that financial markets are "informationally efficient". That is, one cannot consistently achieve returns in excess of average market returns on a risk-adjusted basis, given the information publicly available at the time the investment is made."

level 0 - Efficient-Market Hypothesis (EMH) theory
no research is done because market is efficient
level 1 - reaching this stock through any investing style, screening or event source
biases,ambiguity and controversy
level 2 - gathering data from company, from second sources or personal impact
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level X - lateral thinking, Second Level thinking, Creative Flow

Level X thinking
I have borrowed excessively from Michael Bigger, Howard Marks & other authors, but my interpretation of X level thinking boils down to the ability to identify probable outcomes from connections and correlations that can occur between companies. How does information gathered from bottom up investigation fit into top down information? How can one company affect others? What actions by one source affect others?

Can you equate levels of research to levels of game theory?
I have a bad habit of finding information and assuming that I am the only one who has this data. The SEC goes to extreme lengths to assure that all investors have the same public information. Howard Marks states that data should be "something that should be assumed to be true until proven otherwise" and describes EMH as a sense of "speedy, quick to incorporate information" not "right".

Lake Wobegon is characterized as the town where "all the women are strong, all the men are good looking, and all the children are above average." The Lake Wobegon effect, a natural human tendency to overestimate one's capabilities, is named after the town. When gathering data one should ask who else knows the information or reasoning? If your data or idea is truly actionable, other people will find it too.