We begin by asking the age-old question, "What makes stocks go up and down?" In a nutshell, stock prices change when either the buyers are willing to pay more for a stock, or sellers are willing to accept less for a stock. It is a game of supply and demand, further fueled by investors' greed and fear. However, we focus on one element that often leads the investment herd into decisions: conventional wisdom.

Conventional wisdom is a collection of judgments and perceived insights that are commonly believed among the masses. In the treacherous world of stock investing, those who follow conventional wisdom often find themselves on the wrong side of a market move. Those who make money in the stock market are able to, more often than not, determine how much of the "conventional wisdom" is based on knowledge, and how much is based on fluff.

Take the example of the Internet industry: In the late 1990s, we were told to ignore profits, ignore stratospherically high P/E ratios, and ignore old tried and true measures of value. Instead, we were told of the "new economy" and that stocks could not be valued using the dusty old methods that did not take into account how much the Internet was "changing the world!" However, as time passed, not only did many of these Internet stocks perform poorly, many went out of business. During this time, it turned out that profits were still important, a business plan still mattered, and a poorly conceived company in any industry, even a vibrant and growing industry, could still go bankrupt.

Lately, conventional wisdom seems to be grabbing hold of the headlines again, whenever the stock market is the topic. The list of reasons stocks are doomed in the coming weeks and months is a lengthy one: the threat of terrorist attacks, the possibility of war between India and Pakistan, tensions between Israel and the Palestinians, accounting irregularities in big corporations, and CEOs who use corporate funds to furnish their Manhattan apartments with artwork. With all this bad news out there, how could stocks ever go up again?

To answer this question, it is useful to turn the question around, and return to 1999. Conventional wisdom at the time held that the Y2K "problem" was a major one, and that companies and computer systems all over the world would grind to a halt when the ominous stroke of midnight was reached. Once this fear passed, it turned out that for the most part, the Y2K fears were overdone. Y2K actually led many companies to improve business practices, such as data security, and reliable back-up systems. The stock market roared ahead.

However, in early 2000, with the Dow nearing 12,000, and the NASDAQ hitting 5,000, things actually seemed pretty good. Y2K fears were ebbing, the economy was growing at a bristling pace, stocks were making everyone money, and all seemed good. However, looking back, this was the point from which the current market decline began.

So, what is next for the stock market? Over the short run, we simply do not know. During a bull market, bad news is often discarded and good news is the focus. During a bear market, like the one we find ourselves stuck in now, good news is often ignored, as the market focuses on bad news, and the fear of more to come. This is where conventional wisdom often misses the mark, and leads investors down a dead-end road.

There are simply no guarantees in the stock market. But, the U.S. stock market has increased in value over the last 100 years for the same reasons that it likely will increase over the next 100 years. The Internet has provided many businesses and employees with productivity increases. The United States remains the strongest country in the world, and continues with the process of dealing with those who wish to harm us and disrupt our way of life. Consumers all over the world continue to demand products and services that make their lives better. Companies continue to look for profitable ways to provide these products and services. None of this has changed - not when a CEO buys a piece of artwork with company funds, not when Enron goes away, not when the seemingly endless disagreements between Israel and the Palestinians extend into the new century, and not even when the skyline of Manhattan is forever changed by international thugs.

Sometimes, it makes sense to put "conventional wisdom" on the back burner when making investment decisions.