Facts and evidence have started taking a backseat to opinion, and that mentality is bleeding into investing, according to Bernstein.The firm scoured millions of books spanning 400 years in an attempt to provide quantifiable evidence of this trend.Bernstein argues that this is a harmful mindset that distorts investor perception and could pose problems as the market enters a late-cycle environment.If you've spent any time at all on Twitter, you've probably realized that facts and evidence often take a backseat to opinion and conjecture.Bernstein has noticed too, and it has done extensive legwork to quantify what it describes as the "fall of facts."The firm's findings are jarring, to say the least.The chart below shows how the prevalence of the word "fact" has changed over time, using a tool designed to search for it in Google's library of millions of books published from 1600 to 2008. The darker line at the end reflects a similar analysis applied to the comments section of Reddit.Using the same methodology, Bernstein found that the same situation has unfolded with the word "evidence." As you can see in the chart below, it has seen an even sharper declineonce again highlighting what the firm sees as a disconnect in reason."This is the first significant decline in the frequency of their use since the onset of the Enlightenment in the 18th century," Inigo Fraser-Jenkins, a senior analyst at Bernstein who leads the firm's global quantitative and European equity strategy, said in a note to clients.And while Bernstein is worried about what this all means for the world, the firm argues that investors are particularly at riskthe increased propensity for traders to rely on opinion, it says, is negatively affecting the investment landscape, which will be problematic as we enter the final stage of a market cycle."Our ultimate concern is for the intellectual health of society, but there are issues here that are more immediately germane to investors," Fraser-Jenkins said. "This could well matter for economic growth. The increase in the use of the words 'fact' and 'evidence' from the early eighteenth century coincided with the first significant and sustained increase in economic output per capita in human history."The disconnect between opinion and reality has manifested within the framework of corporate earnings. Bernstein describes the gap between S&P 500 operating and reported earnings as "very wide." That's significant because operating profit usually reflects the opinions of management, while reported numbers represent fact-based findings.And while the spread has widened in the late stages of economic expansion, Bernstein notes that this is the first time the gap has grown because of an acceleration in operating earnings as opposed to a fall in reported profit (see the third chart).In other words, conjecture has infiltrated thinking around earnings season to a degree never seen before."We see this as a tangible example of the triumph of opinions over facts," Fraser-Jenkins said. "It should be of very tangible concern to the investment community. If we are already late in an economic cycle when the tendency for company managements to employ a rosy spin on their numbers is at its most acute, then we should worry if this gap between opinion and reality is wider than in previous cycles."That's not to say Fraser-Jenkins is opposed to bucking conventional thoughthe readily acknowledges the importance of such behavior throughout history and says research-driven arguments have helped shape the world we live in today.But with people increasingly keen to cut corners, Fraser-Jenkins isn't holding his breath when it comes to a huge, imminent breakthrough."Challenging authority and received wisdom is a good thing, but only if one is doing so with appropriate evidence and facts," Fraser-Jenkins said. "The Scientific Revolution succeeded because it did precisely that."SEE ALSO:One stock-trading strategy has quietly been crushing the market ' and Goldman Sachs says it's just getting startedJoin the conversation about this storyNOW WATCH: Wall Street's biggest bull explains why trade war fears are way overblown
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