About twenty percent of the public believes any insane, illogical idea a creative survey-maker may dream up. This is known as the “one-in–five rule.” Let’s look at some of the wild things our friends and neighbors might believe:

• The cause of the disappearance of Malaysia Airlines flight 370 was due to space aliens, time travelers, or beings from another dimension.
• Agenda 21 is a top-secret program, funded by Rockefeller and Ford Foundations, to battle overpopulation. They are paying Monsanto to develop genetically modified foods that slowly kill the people who eat them.
• One-in-five Americans believe the vaccine-autism legend to be true.
• Twenty percent of people believe that health officials know that cell phones cause cancer but are doing nothing to stop it because large corporations won’t let them (Source: Oliver and Wood, JAMA Internal Medicine).

Could investors also fall prey to mass delusions like these? As Sarah Palin would say, “You betcha!” Though not as interesting as some of the above items, many fallacies investors believe can be more dangerous.

Here are some of the more common things I have heard over the years:

• Owning lots of mutual funds makes a portfolio diversified.
• Paying more for investments will lead to higher returns.
• All financial advisors are required to look out for their clients’ best interests.
• Mixing investing and politics is a good idea.
• Interesting stories make great investments.
• A daily check on investments is a smart way to protect them.

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