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The Power of Uncertainty

You’ll often hear people say that investors or markets “hate uncertainty.” And that causes market drops and volatility.

Why do markets, investors, and humans hate uncertainty so much?

Well, for one, humans are wired to prefer predictability and certainty. And firms, traders, and other market players rely on forecasts and models. When something big happens that throws the future in doubt (which happens pretty regularly), it makes their predictions and models inaccurate.

For long-term investors who measure success in years and decades, these blips can fade into the background noise. For short-term traders who need to show success in days and months, it’s a pretty destabilizing experience. That freaks people out. And often leads to drops, volatility, and other extreme market behaviors.

So, what can we do to find the silver lining hiding inside all the uncertainty in our world? Because it’s not going away.

One: View it as a reality check. Uncertainty is grounding. It shows us, sometimes painfully, that we don’t know as much as we think we do. So let’s embrace humility and accept how little we really know.

Two: Be grateful for what we have. What are you truly grateful for right now? Now’s a chance to appreciate and be thankful for what we CAN be certain of. No matter what’s going on in the world, we all have blessings in our lives.

Three: Embrace resilience. We all have an inner core of steel that’s only visible when something scratches the surface. Uncertainty challenges us to improvise, flex with the times, and build up our inner resources.

So, deep breath. Yes, times are uncertain, and yes they can be stressful, but we’re stronger than we think.

If you have any concerns you would like to discuss, please reach out to me or our team. We would be happy to discuss your specific situation!

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