“It ain’t what you know that gets you in trouble. It’s what you know for sure that just ain’t so”. Mark Twain had the ability to cut through the noise and simplify the most complex issues and get to the heart of the matter. In investing and many areas of life, we have a tendency to believe what we think is fact when unfortunately, it’s just opinion, and as an opinion it might not be completely accurate. When we act on things based on a belief something is a fact and it turns out to be wrong, things can go wrong in spectacular fashion.

In Europe in the 1500’s, the ‘technology’ did not exist to adequately make water safe to drink. It became a common belief that the water was not safe. It did not help the drought conditions in the Carpathian Basin forced rationing to try to stave off crop failure. To conserve water, common belief was to drink alcohol, after all, it quenched the thirst and made people feel better (temporarily anyway). The widely accepted view was this strategy conserved water. Wealthy people of the time celebrated saving water by drinking from glazed pottery, poorer people used their hand formed mugs. Innovation of the time had solved the problem. It was not until centuries later that facts started to unveil the results of the innovation. The alcohol had an acidity that broke down the glaze on the mugs and accelerated the degradation of the handmade cups. The glaze contained a significant amount of lead and most of the handmade cups were formed from lead. Analysis has shown that the combination of alcohol and lead shortened many lives, and it may have been a far less risk to just drink the water.

How does this relate to investing? On many occasions when we’re reviewing a new clients’ holdings, we see ideas that are not cohesive to a strategy or an unusual amount of risk and of course, we have to ask, “how did this investment come to be?” Most of the time it is a “tip” from a neighbor or friend or from “Joe Pundit on BSTV”, none of these sources likely have any idea of your unique situation. Your friend or neighbor might have good intentions, “Mr. Pundit”, maybe not so much. Having someone who truly understands you and your unique circumstances goes a long way to making sure your investments are making a step towards your goals. Yes, mistakes can (and will), still happen but having a trusted Advisor to distill out the noise will help to align your investments with what you want to accomplish; something we should all raise a glass to.