Whether Stock market investments are done-based on faith or knowledge?

My face book well wisher quizzed recently that it is always more” difficult to fight against faith than against knowledge”.

At the same time my investor friend also mailed me asking whether one should make investments in stocks based on faith or on the basis of one’s depth of knowledge about investments and so on.

Therefore I am putting my thoughts in this post.

You may agree with me that knowledge is science and faith is conviction or just a belief that you gather from your society and environment. Knowledge cannot be contradictory and whereas faith can swing from time to time. Therefore, faith can be contradictory and contrarian.  But both are limitless.

Sometime it pays to be a contrarian. Not definitely always.

In other words faith represents trends. Most of the time trends go in the same direction for sometime whether its real estate prices, credit card debt, Treasury issuance, stock market price movements and so on.

In corporate verticals contrarianism or faith or conviction has been emerging as the “New Consensus”.

Of course faith can work sometimes till some inflection points. But when the trend is exhausted and can do nothing but reverse. The trouble is therefore it’s just t impossible to pick such inflection points.

Despite why faith is so appealing? It is appealing and growing immensely in popularity because it has so much smart-guy fission. Therefore often” faith or trend” is called as your friend and go ahead don’t question about the reasons behind it.

Investors and corporate continue to hope that the economy will improve and the global stock indexes will hit new highs. It is this strong faith that keeps them in perusing to watch the optimistic clock in their development plans.

Contrarianism mostly doesn’t work – trends last until they don’t, which is often a long time, especially in a world of tight-coupling and information cascades; and long-lasting trends crush smarty-pants.

If one can find a correct mix of faith and knowledge in any area of their ventures will definitely land them in optimistic curve.

Can we then put faith as wisdom of crowds and knowledge as wisdom of individuals?

Do you agree with me?