Conventional Wisdom is Often Wrong
Posted: Jared Jameson
Conventional wisdom is defined as the generally accepted belief, opinion, judgment, or prediction about a particular matter. “Recycling saves the environment” is a good example. But is it true? In the article referenced below, the author argues that sometimes recycling is worse for the environment than just putting the waste in a landfill. He makes a strong argument that conventional wisdom is wrong.
Incorrect conventional wisdom when it comes to investing can be costly. Invariably, we see investors picking investments based simply on how they’ve done the past few years, the past year, or even the past couple of months. Unfortunately, there is no evidence that this selection methodology works but the “conventional wisdom” seems to tell everyone it does. As you’ve no doubt read and heard many times, “past performance does not predict future results.”