Managing other people’s money remains a huge business. Although the business of investing could have experienced a big trimming following two 50%+ drops in stocks in less than a decade, barely a dent was made.. 

Of course, we lost Bear Stearns and Lehman, but the mutual fund industrial complex, and more broadly, the business of investing expertise and advice, continues growing after each hiccup.

Although getting between you and your investments continues to deliver spoils in the tens of billions a year to the middle men, from the lowliest broker/salesman to the highest-flying billion(s)-dollar-a-year-plus salaried hedge fund manager, the only thing shrinking is the actual return from owning stocks and bonds, particularly if you follow many of the "experts'" wisdom and guidance.

A Random Walk Down Wall Street may have focused on efficient markets, but we believe randomly allocating a portfolio is better than targeting areas and strategies popular on Wall Street. In other words, broad indexing is better than focusing on popular ideas.

We’ve seen plenty of bad, yet popular ideas over the last decade or so, with many of them all but forgotten as new ones rise to the top. Surprisingly, investors can’t resist lining up for the next one.

This déjà vu all over again exists because Wall Street has to sell something to exist. Often this service includes not just commission-based transactions or stock or bond offerings, but ideas. Experts need to know something you don’t; otherwise, why would you pay them? Money management isn't surgery. You can allocate your own money easily enough. Try that with  a broken leg. Yet doctors' pay gets trimmed more than money managers.

In roughly chronological order, here are some of the more popular investment themes of the last decade from the highest-paid fortune cookie scribes in the world:

Theme: Buy what You Know

Synopsis: Mega-cap leading brands you know and love are the keys to your investing success. Popularized early by Peter Lynch. 

Status: Dead by the late 1990s (and still dead) as big brands we know and love, like Home Depot, Harley Davidson, Disney, Wal-Mart, and Coke, reached such high valuations they had nowhere to go but down. But merely being overpriced doesn’t kill a theory on Wall Street. What did this one is stuff we had no idea about, like JDS Uniphase and Cisco, where the stock market darlings near the end of the 1990s. Until they tanked. 

Theme: Growth Over Value

Synopsis: Some companies grow so fast even a 100 p/e ratio is a good deal compared to a dead-in-the-water 10 p/e value stock. 

Status: Dead, but rising slowly from the grave (in time to fail again,) because for much of the last few years, growth has beaten value, and dot-com, bubble-era stocks and funds have beaten just about every new fund launched in the last five years.

Theme: Emerging Markets Stink! Long Live American Stocks

Synopsis: Popular in the late 1990s, when hot growth stocks in the U.S. went up, up, up, and away while emerging markets stunk. Emerging markets seemed like high political risk places with boring commodity and Old Economy companies.

Status: Dead, especially after more than a decade of emerging market leadership. Now it’s common to pay a higher p/e for an emerging market stock than an tired old U.S. growth stock.

Theme: Real Estate Never Goes Down

Synopsis: Popular in the mid 2000s, when global disillusionment with stock markets and intangible investments led to the observation that real estate prices are a perpetual profit-making machine, with no real downside and easy leverage. Naturally, debt on real estate can’t be risky if real estate only goes up in price .

Status: The undead. Investors are still positive about real estate, but not wildly optimistic like the old days, expecting merely single digit annual returns into the future. Another 20-50% drop would still be characterized as impossible, especially in rock-solid markets like NYC.

Theme: Current Yield Is Better Than Future Growth

Synopsis: This theory kicked in during the mid-2000s after value stocks whipped growth stocks for about half a decade. Like most popular investing theories, this one looks backward and continues the last five years or so into the indefinite future.

Status: Fading. Years of Google and Apple domination and once-high, dividend-paying bank stock collapses have taken their toll on the dividend lovers.

Theme: Emerging Markets Will Rule 4Ever/The Great Decoupling

Synopsis: Popular in the late 2000s (right before the big drop,) when hot growth stocks in the U.S. dried up for years. Emerging markets seem to have far more upside than downside, with low political risk and massive economic growth. Companies tapped into that growth in the economy and the never-ending commodity boom. U.S. demand was unnecessary, and emerging markets would soon be on their own growth spiral, much like the U.S. in the 1900s.

Status: Alive and kicking, even after a scary drop harder than the U.S. market, rising inflation in emerging markets, growing political risks, and what seems to be a decoupling in a bad way (for emerging market stocks) over the last few months.

Theme: Beware the Inflation Monster

Synopsis: I’ve seen the future, and it involves wheelbarrows full of money required to buy a loaf of bread, just like post-WWI Germany. Invest in hard assets, foreign markets, and maybe wheelbarrow stocks . 

Status: This party isn't going to let some of the lowest inflation ever recorded (at least since central banks stopped letting massive deflation destroy an economy) ruin a perfectly good time (selling inflation protection strategies). Recent Federal Reserve policies only add fuel to the "I told you so" inflation worry warts' fire.

Theme: Alternative Energy Is the Future

Synopsis: $150 oil is the last stop on the way to $500 oil. Get in on solar, ethanol, and bio-whatever while you can. 

Status: Dying, but slowly, even though alternative energy stocks have been the biggest letdown of the last few years. Guess when fund companies launched a pile of alternative energy funds? Right at the top, like clockwork.

Theme: The U.S. Dollar Is Toast

Synopsis: All empires must eventually collapse. The Greenback, and America, is in long-term decline, just like Rome. 

Status: While this theory kicked in largely AFTER the US dollar slid in the first part of the 2000s (just in time for the dozens of currency funds to launch and not make any money…,) America is still investors' "biggest loser." Recent global unrest, inflation in emerging markets, a relatively strong U.S. economy, euro-area mini collapses and currency questions – not to mention a stable to strong U.S. dollar since that initial slide – don’t seem to derail the "dollar is falling from the sky" declarations. Like Hollywood, Wall Street rarely lets reality get in the way of a good story, instead only telling the stories people will pay to hear.

Theme: Muni Bonds Are Going to Default, Big-Time

Synopsis: States are broke, and the broke can’t pay their debts. Just look at sub-prime real estate borrowers! And just because experts who actually know munis say widespread defaults are unlikely doesn’t mean squat, because experts told us mortgage debt was rock-solid and banks as good as gold.

Status: Popular, as billions drain out of muni bond funds each week on fear alone. Investors in high tax brackets can now earn MORE after-tax in Vanguard Long-Term Tax-Exempt Fund Admiral Shares (VWLUX) with a 4.23% tax free yield or 6.51% taxable equivalent for only slightly more duration risk (7.6), than with Vanguard High-Yield Corporate Fund Admiral Shares (VWEAX) yielding 6.1% taxable with a 4.8 duration. The key difference between these two funds we’ve used from time to time in client accounts? The muni fund has an average credit rating of A compared to B for the junk bond fund. But of course, states are worse credit risks than leveraged American companies…or so the theory goes.

Theme: Interest Rates Are Going To Rocket Up Any Day Now

Synopsis: Rising rates sink all boats. The only solution is short-duration bonds, commodities, and gold. It worked in the 1970s.

Status: Won’t die even after nearly a decade of being wrong. The only one getting hurt by the current state of interest rates is the low-duration bond investor, because that's where the true bubble is. Earning  0-2% while investment-grade yields are 5% on the long end will lose you more money than the one-time hit a longer-term bond fund might take – might – if, and when, rates rise sharply.

Theme: Gold Cures All That Ails You

Synopsis: Worried about America in decline? Global unrest? Inflation? Deflation? A falling U.S. dollar? Low stock returns making retirement a far-off dream? Gold is the solution to all of these problems and more!

Status: Still shining. In spite of rising supply from mines, and slack demand for non-hoarding…and prices greater than double the cost of production.

The wildest part about these strategies is that they're often the complete opposite of the prevailing strategy that was prominent a few years before: 

New Economy good, then Old Economy better. Bricks and motor bad, real estate the new good. Emerging markets great (early 1990s), emerging market bad (late 1990s), emerging markets great (mid 2000s).

The Powerfund Portfolios continue to focus on not-so-popular investing ideas and theories. Ideas like: what if interest rates go down instead of up? Or simply stay low for another decade? What if commodities continue the collapse that started a few years ago and take emerging markets down with them? What if the U.S. dollar goes up because other countries start acting like…well other countries that have frankly never had their economic stuff together as well as America has, in spite of our government’s ongoing shenanigans.

Bottom line? If you can’t go 30 minutes on CNBC without hearing about X (be it oil, gold, or other commodities, emerging markets, inflation, the collapse of America, etc., etc.) and especially, if the mutual fund industrial complex is currently rolling out many new ways for you to profit from, or protect yourself from X, move on. 

You don’t want a portfolio built for Wall Street’s fears and expectations any more today than 10 years ago, or 100. The graveyard of bad ideas, from railroad stocks, to tax-favorable oil partnerships, is Wall Street’s only real growth story.