9 Bits of Conventional Wisdom You Should Ignore

Last Updated Sep 23, 2011 3:59 PM EDT

Conventional wisdom can be defined as ideas so accepted they go unquestioned. Unfortunately, conventional wisdom is often wrong. Two great examples are that millions of people once believed that the Earth is flat, and millions also believed that the Earth is the center of the universe. Just because millions of people believe a foolish thing, doesn't make it any less foolish.

Today, we look at some ideas that could be said to be conventional wisdom on investment strategy, and offer an alternative view, one we will call the New Finance.

Before we begin, it's important to note that we're not saying that people who believe these bits of conventional wisdom are necessarily fools. Anyone who goes along with the conventional wisdom simply may not have been exposed to the truth. However, once you know the truth, you can no longer claim ignorance as a defense.

Also, feel free to leave your own bits of conventional wisdom in the comments below.

Photo courtesy of hans s on Flickr.

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    Larry Swedroe is director of research for The BAM Alliance. He has authored or co-authored 13 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.