In 1958, Harvard economist John Kenneth Galbraith was looking for a term to describe ideas that were commonly held, intellectually accessible, and yet fundamentally flawed. To define such widely spread misconceptions, Galbraith wrote: “I shall refer to these ideas henceforth as the conventional wisdom.”

As an asset manager, I have come to view conventional wisdom as the surest path to investment underperformance. One might even amend the old Wall Street saying to read: bulls make money, bears make money, but conventional wisdom gets slaughtered. Consensus opinion is generally a sign to get on the other side of the trade.

Recently, I have noticed a critical mass of groupthink growing round the expiration of the Federal Reserve’s asset purchase programme, dubbed QE2. After tripling its balance sheet in two and-a-half years, the conventional wisdom is that the era of quantitative easing should now give way to the era of inflation. As a result, the foregone conclusion is that US interest rates will rise and bonds will underperform significantly.