For people who have been investing for just a few years, the process by which one had to get information about companies before the ubiquity of the World Wide Web must seem as foreign as Saudi beer.

No online EDGAR nor its for-pay brethren, Edgar Online (NASDAQ:EDGR). No quick lists on Yahoo! (NASDAQ:YHOO), no immediately available research through Ameritrade (NASDAQ:AMTD) or Schwab (NYSE:SCH). No Motley Fool discussion boards to discuss ideas with like- or contrary-minded folks.

No, back in the old days (i.e., early '90s and before), you got on the phone, called the company, and waited for the package to arrive. Or you could call your broker at Merrill Lynch (NYSE:MER) and ask about the company's research. Or you could consult the paper version of Value Line (NASDAQ:VALU), usually at the public library since an annual subscription costs hundreds of dollars.

You had the print versions of TheWall Street Journal, Fortune, Investor's Business Daily, and newsletters, but a search for stories on specific companies was labor-intensive. Comparisons had to be done manually, or on local versions of some spreadsheet tool. In fact, I have a copy of the original version of the The Motley Fool Investment Guide, written in 1997, and find the instructions on getting information from and about companies to be, well, charming.

(As an aside -- without any modesty, false or otherwise -- I'd like to say that I still find the Investment Guide to be one of the best introductions to the stock market ever written. I require no modesty, you see, because the book was written long before I came to The Motley Fool. Some of the elements are dated, but the core philosophy of thinking about stocks as pieces of businesses is timeless.)

Apres le deluge
We don't research that way anymore. The shrinking violets among us can get access to the public documents for thousands of U.S.-based and international companies with a click of the mouse. Even companies like Alleghany (NYSE:Y), which continue to shun the Internet, aren't immune. You can still go to the SEC website and read about them until your heart's content. It's a dream.

It's also a complete nightmare. For investors, particularly for less knowledgeable ones, it is very difficult to determine what of the reams of information we can access is important, and what is noise. It's a problem that the early adopters of the World Wide Web may have found imponderable -- that the access to all this information hasn't necessarily made us any more knowledgeable. For while information is a key element for knowledge, in no case should having lots of information be confused with being knowledgeable. In fact, it is not too hard to imagine people with too much information but not enough basic understanding to be even more dangerous to themselves than ones who are at least aware of their ignorance.

In any situation -- it doesn't have to be the markets -- whom do you think is a bigger threat: the person who is inexperienced and knows it, or the one who is blinded by his own confidence? For example, ever notice how some SUV drivers seem to go nearly as fast on the snow and ice as they do in good conditions? They have at their disposal a tool designed to handle bad road conditions, and they have the information that SUVs perform better in such conditions. But then there's this: A few years ago I learned that the incidence of weather-related accidents in Colorado involving SUVs is several times higher than that of accidents involving other kinds of passenger vehicles. SUVs ought to be safer, but since drivers perceive this safety, they substitute a bit of information for the knowledge that adverse road conditions require more caution no matter what kind of car you're in.

You have the info, but does it make sense?
In investing, what is really, really important may be hidden by mounds and mounds of information. For example, not that long ago I received a note from someone who argued that Sirius Satellite Radio (NASDAQ:SIRI) could be worth $30 per share -- about nine times where it is trading now. Essentially, this was his argument: Sirius is valued at about $13,000 per subscriber for its (at the time) 250,000 subscribers; it only needs to get to 2.5 million subscribers in order for the market cap to increase 10-fold.

He had the information. The knowledge, not so much. There can be plenty of rational disagreement on what Sirius is worth, but there is nothing rational at all in thinking that each customer should remain valued at 85 years' worth of revenue as the company grows. Doing so takes the present price, at which some exceptional levels of growth are built in, and assumes that it values the company as it exists. But it doesn't. It values a Sirius that will have enjoyed exceptional growth and phenomenal economic success. That Sirius doesn't yet exist. It might one day, but it doesn't now.

And yet, that's exactly what you can sell Sirius for today -- after all, aren't prices also information? Knowledge doesn't come from looking at the price, all of the strong buys put out by analysts, and the yammering of the collective talking heads. Knowledge comes from being able to take a look at the underlying company, figuring out the triggers of its success, and then figuring out whether the price makes sense.

The funny thing about the markets is that confusing information with knowledge doesn't necessarily preclude one from making enormous gains in the stock market. As we've discussed before, security values don't differentiate between a shareholder who is knowledgeable and one who is not. They get the same reward. But over the longer run, how could the person who knows that a company's "beat by a penny" includes onetime gains on sales of equities and goofy pension assumptions not have an advantage over the one who thinks "beat by a penny" equals "good," with no further thought involved? How could the person who recognizes that a company is paying a "research firm" for its strong buy not have an advantage over the one who takes the report at face value?

The mounds of information out there provide an entirely different problem than the one investors had a decade ago. Then, investors had to painstakingly gather information because very little was immediately available. Now, the process is still painstaking, but because there is so much bad, conflicted, worthless data. Getting to the core of the issue is a challenge. However, in the long run, facing the challenge will be worthwhile.

Bill Mann does not have any beneficial interest in any company mentioned in this article. Please view his profile for a complete list of holdings. The Motley Fool invites you to get some knowledge in the form of one of its investing newsletters. Take a free trial of Mathew Emmert's Motley Fool Income Investor today! The Motley Fool is investors writing for investors.