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I've said before that you are more vulnerable to skillful rhetoric than you think. Well, the past week proved it.

You've probably read about "Climategate" - how thousands of hacked e-mails from climate scientists revealed that they colluded to fudge their conclusions about global warming, told each other to destroy incriminating e-mails and perhaps even dumped raw data to mask the fraud.

Why did it work? Because the falsified conclusions appealed to people's good nature, and because the conspirators co-opted above-average rhetoricians to deliver their message.

Now why am I going on about this? For two reasons: First, because global warming is an investment theme that a few brokers are pushing; so, if you are a theme investor, be careful. Second, this sort of revelation is a perfect teaching moment of the madness of crowds.

Similar irrational manias included global cooling in the 1970s (when investors were urged to invest in thermal insulation, and the like); the Club of Rome's fear that we're running out of resources; the Internet dot-com bubble, when insane stock prices for companies without revenues were the norm; and others of the same ilk: mass hysterias that allowed a few media-savvy promoters to take the money of the many, by preying on their credulity, their emotions or both. Like global warming now.

If you think that calling global warming an irrational mania is a bit harsh, consider this: Say that a pharmaceutical company's researchers were caught fudging their tests to make their drug look effective; then, when found out, conveniently lost the non-fudged data. If a doctor prescribed for your child the fraudsters' drug, would you let her take it? If you said yes, would we not be justified in saying you are acting irrationally?

This, in effect, is what's happening now: global warming has become a near-religious test of civic virtue, just as being invested in Internet stocks became a test of investment savvy in 2000. Which is why many investors dazedly held on to Nortel all the way down to zero, even after its accounting issues had been revealed. And now, even though you can't trust the climate change data, the Copenhagen conference still goes on and promoters including Al Gore are out begging the public to give the scientists the benefit of the doubt. This is the same Mr. Gore who is profiting from tax credit-based environmental investments.

Do you still wonder why I see elements of mass madness here?

If there's a key lesson here for you, it's this: learn to resist the lure of popular fads, whether market-related, or ideology-based. If you don't, you're likely to find yourself investing in the next Nortel, Bre-X, or Madoff fund, or windmills supported by tax credits.

Oh, yes, tax credits. If there's one area to watch out for, it's a virtuous industry needing tax credits to make it viable. In the 1960s, the Club of Rome concluded (based on some other dodgy data) that the world was running out of resources. So, the Canadian government gave inventory tax credits to mining companies. The result was overproduction, bankruptcies and low resource prices for years. There was a similar panic about oil in the '70s, so huge tax breaks were offered for drilling the polar icecaps. The drillers went bust, as did some RRSPs for the credulous who fell for it.

Honest scientists can fall prey to manias, too - especially investment scientists. Remember modern portfolio theory? It, too, was a popular mass-mania that came replete with math and famous professors, who got Nobel prizes for the silly notion that risk is equivalent to the squiggliness of a line, not ignorance of the fundamentals. This theory ushered in derivatives and the Basel I and II banking rules, which helped undermine the global banking system.

How could you know that modern portfolio theory was a popular mania, and that its science was bunk? Why, Warren Buffett warned you for years. The main supporters were professors and derivatives salesmen - all of whom, like Al Gore (another Nobelist), benefited from the foolishness, while the masses lost.

So how can you ensure you're not harmed in future by slick rhetoric? First, by forcing yourself to admit, when the first signs of fraud appear, that you have been duped. Don't let your pride stand in the way. Get out. This way, you avoid staying on to the grim end with future Nortels.

Second, whenever you see a talking head pushing a stock or a fashionable disaster on TV, ask yourself: "Who pays him?" Everyone in the market is talking up his book, yet once a mania starts, everyone has the same book, and so they all push the same thing higher until it all unravels.

How close are we to the unravelling of the global warming fad? I think it has started.

There are already calls in the United States and Britain for probes into Climategate, and dragging out all the lies and airing them in public will be the end of global warming.

So don't get stuck with investments tied to it, either directly, or via tax credits.

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