Conventional wisdom says that wisdom and youth are mutually exclusive. In life, we start off as young & dumb and grow old & wise.
That is, unless everything learned from all those years of life's lessons changes.
Conventional wisdom currently seems to be a liability in today's market, and truly much of that conventional widom no longer applies. Stocks and bonds have lost their inverse relationship. Interest rates have managed to fall below zero for negative rates. Momentum investing is not as precarious as it had been in the past. In short, we are learning a new set of conventional wisdom for the modern market.
The percentage of assets within index funds and ETFs of total money invested in U.S. equities went from 20% in January 2010 to over 50% by January 2020, a change that even outpaced expectations.
There's a false narrative that big banks prey on the individual investors to siphon their money first, as if they collude to share in the profits collectively. The better comparison would be to that of a poker game. Novice investors are the person at the table that cannot spot the sucker (to borrow a well-known adage).
Modern investing practices, however, may dispel that mindset however. If it is not individual investors preying on index funds, keeping large corporations buoyant after a decline, knowing full well that index funds will have to purchase more units to rebalance the large funds.
Some individual investors, and even money managers, hold to their beliefs that the way things have been is how they will be again. No amount of evidence to the contrary will break their thinking. In a way, it's the backfire effect at play. They reject new information that disrupts what they have seen for themselves in the past, what they have known to be true for so long.
Unfortunately, most truths are only true for so long before things change. Prolonged reliance on proven market wisdom creates its own reticence against it, the reluctance to adapt to meaningful changes in an industry sustained on salesmen repackaging the same products with gimmicks to spark FOMO and buy anew. Like the Gold IRA, for example.
Old jaded men who have achieved enough success to comfortably wrest on their laurels lack the proverbial wisdom that age allots them. Instead, the partly naive youth with wide eyes and open minds reap the rewards when systemic changes occur. To this end, they receive the best of both worlds: youth & wisdom. Until things change again.
