Successful investors in the stock market that go against prevailing wisdom are called contrarians. Unsuccessful contrarians are often called fools.
Conversely, thousands of investors leap at opportunities that turn out to be less that spectacular just because everyone else seemed to be do it. Investors in Facebook's initial public offering for example.
The challenge facing investors in the stock market is to determine whether to follow the crowd or go their own way.
Which is really another way of saying, the best decision is one you make yourself based on your own analysis and not based on the theory than everyone else must be right (or wrong).
Anyone who has followed the stock market for any length of time has probably felt like this truism from almost 500 years ago:
"A fool and his money are soon parted."
Of course humorist Will Rogers had his own spin: "A fool and his money are soon elected."
The stock markets (and politics) provide ample opportunities for foolish decisions.
Can't miss stocks, the next big thing, ground-floor opportunities and other possibilities are always there waiting for us to bite (and to bite us).
The problem is sometimes these seemingly long shots turn out to be the best buys ever and your foolish decision was not investing.
Many years ago, I attended the Consumer Electronic Show in Las Vegas. I was not there to look at computers, but a booth caught my eye.
At a very modest booth, were several funny looking boxes that the person told me were going to be the hottest thing in the personal computer market, which was booming at the time.
The boxes had a wire with an odd-looking device that you could use to scroll around the tiny screen of the computer.
I thought it was an interesting idea, but since IBM dominated the personal computer market, along with others such as Compaq Computers, didn't give the idea much chance.
Had I the vision to see where the personal computer market was going, I would have bought some Apple stock that day.
Investing with hindsight is always a winning exercise, but unless you analyze your foolish decisions along with those that were correct, you won't learn anything for future opportunities.
There were dozens of personal computer companies springing up during this period and many of them are either no longer in business, have sold off their PC lines (as IBM did), merged with other companies (Compaq and Hewlettt Packard) or stuck it out as Apple did.
Separating the winners and losers is one of the most difficult tasks facing investors.
The task of finding winners begins with a thorough analysis of the company, its financials and the depth and breadth of its economic advantage or moat.
The more conservative investor will avoid any company that does not have a substantial moat protecting its future profits.
More aggressive investors look for companies that are building their own moat - an investment now may be a future growth star, but it may also fail.
The risk of this type of investment demands a higher anticipated return in exchange for the chance that it could falter or fail sending its stock tumbling.
This type of investor is often years away from retirement and can afford some setbacks in shooting for a higher return.
Investors near or in retirement need to be conservative, since they have many fewer years remaining to make up for mistakes.
There are no absolute solutions that work every time, however that shouldn't stop you from looking for opportunities that may not be the last shiny thing that catches your attention.