More and more, we base our investment decisions on our reading of the global political and economic scene.  Due to the varied and ever changing landscape, we can easily depend on common wisdom to help sort through the mess.  Unfortunately, these shortcuts can be incorrect and lead to mistaken responses.

For example, the link between poverty and terrorism appears reasonable—poor, uneducated people, with little hope of economic advancement, seem more likely to commit such acts than their more fortunate brethren.  Yet, as an article in The Economist points out, this is not necessarily the case. 

For those of us whose ancestors came from Europe many years ago, the family often has a story explaining how their surname was changed upon coming to America.  For example: "My great-grandfather was called Rogarshevsky, but when he arrived at Ellis Island, the immigration officer couldn't understand his accent.  So he just wrote down 'Rogers,' and that became my family's name."

Nothing beats heading up to Baltimore on a cold, rainy February day. But the pleasantries of the Charm City would have to wait; an assortment of mutual fund managers and analysts were making prognostications about the 2011 investment environment in an all-day event.

For the most part, the panelists were quite bullish on the U.S. economy and the stock market. They made nods to the ballooning U.S. debt and looming inflation, but they also pointed to growth in business investment, consumer spending, and exports.

What is the largest component of your total wealth? Your brokerage account? Your retirement account? For many people, the biggest part of their wealth lies in their ability to earn income in the future.

Human capital is the present value of your future labor income. Some people's jobs are like a bond. A tenured professor can reasonably rely on a fairly steady stream of income over time. Other jobs are more speculative, like stocks. Working at a high tech start-up may lead to a large pay-off, but the business could just as easily go bust.