Settled Science? Things Change

Legal scholar, Walter Osborn, was recently quoted in The Wall Street Journal regarding the FDA’s ban on trans fats.  He points out that from the 1950s on, dietary reformers promoted trans fats as a safer alternative to animal fats and butter.  Public health activists and various levels of government hectored consumers and restaurants to embrace the new substitutes.

Now the same groups believe that trans fats appear worse for cardiovascular health than what they replaced. Hence the new ban.

Investors should take note, not necessarily of the merits of the trans fat issue, but of the risks inherent in assuming that things don’t change.

It is not possible to be fully informed on all of the possible changes that may be brought about by new research or additional insights.  New ideas and products are virtually a daily event.  Things change.  Didn’t many of us once believe that ethanol was a solution to the perceived environmental problems surrounding the extensive use of fossil fuels in motor vehicles?

Investors would be well advised to consider diversification as a potential strategy to partially mitigate the impact of unexpected changes.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®