Wikipedia defines conventional wisdom as the body of ideas or explanations accepted as true by the public and/or experts in the field. Wikipedia goes on to note that conventional wisdom is not necessarily true. It is, additionally, often seen as an obstacle to the acceptance of newly acquired information.
Never-the-less, conventional wisdom, more often than not, proves to be substantially correct. Investors should be cognizant of conventional wisdom in making financial decisions. However, recognizing potential weakness in conventional wisdom could be helpful in adopting strategies that should serve to reduce risk in the event that conventional wisdom proves to be inaccurate.
Consider the recent presidential election. While it is often difficult to accurately identify conventional wisdom, most prognosticators did not expect that Mr. Trump would be nominated, much less elected. However he was, and since the November election, most broad market indices have risen some 30%.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA