The Uncertainty Monster – The Big Picture

Go to your favorite website, turn on the TV or radio, pick up a newspaper (!) and you will hear one word over and over again: uncertainty.

“There is more uncertainty than ever.”

Uncertainty is everywhere!

There is great uncertainty about the state of the stock market – is the bear market over? Is this rally real? How much worse can this get? What about the earnings? Stocks are down, bonds are down, is there a place to hide?

So much market uncertainty…

What about this economy? It’s so uncertain! Will we have a recession or are we in one right now? If so, how bad will it get? What about inflation: is it temporary, have we already peaked? Will it be sticky, harmful, persistent? will i lose my job

Economic uncertainty abounds…

What about the Federal Reserve? Are they behind the curve, overly aggressive? Can they run inflation? Deliver a soft landing? Will they trigger a recession? And what about the quantitative tightening?

So much confusion about bid prices; so much uncertainty…

What’s Happening to the Midterm Elections – Do They Really Matter? What about abortion rights, contraception, marriage equality? Has the Supreme Court gone rogue? is Biden running in 2024? Who will be his Veep of choice? Will Trump walk? What is January 6th all about?th committee? Will they refer the former president to the Justice Department for indictment? What will happen to the war in Ukraine? Could it be over soon?

The best people say there is tremendous political uncertainty…

Here’s what you need to know about uncertainty: It’s always the same. The future is unknown and unknowable, inherently uncertain. They simply refuse to acknowledge this because this reality is quite frightening.

I can see you doubting it, so please think back to last year when everything was fine. In 2021, so the counter-argument, there was not much uncertainty. Last year you knew where you were:

-Markets never closed less than 5% from all-time highs;

– The economy was so good that everyone quit their jobs;

-President Biden passed a Covid law AND a bipartisan infrastructure bill.

Ahhh, the good old days.

Which raises an interesting question: if last year had so little uncertainty, where was the acknowledgment of the troubles of 2022? Why didn’t anyone see this whole mess coming?

Despite the lack of uncertainty over the past year, why didn’t you anticipate the worst bond market in centuries? Why didn’t you see the worst opening 6 months in the stock market in 40 years? The worst inflation since 1981? Q1, in which stocks and bonds fell double digits in the same quarter for the first time in 4 decades? WITH SO LITTLE UNCERTAINTY, HOW DID YOU MISS THIS?!?

Because certainty and its terrible subsequent insecurity is nothing other than a state of mind. Certainty is a level of comfort. It is an unwarranted belief that you know what is about to happen, that you have a good sense of the future and can therefore easily plan what comes next. because the lack of uncertainty.

Of course, this is a false belief, a totally misguided fallacy inherent in the species.

Your lack of uncertainty just means you’re feeling pretty good — comfortable and not threatened enough to casually lie to yourself about how much you think you know. You can pretend to see what’s coming because there’s nothing else to worry about. When the stock market is up 28%, you’re optimistic about the future, it’s easy to extrapolate today into years or decades.

Which turns out to be complete nonsense. They had no idea what was going to happen this year, DESPITE THE LACK OF UNCERTAINTY last year. You felt comfortable in 2021 because nothing rubbed your face about how little you actually knew about the future – not the market, not the economy, not geopolitics. Despite this, you keep making predictions; Too bad you’re so bad at it.

You know, you just managed to forget how little you knew about the future. When your limbic system isn’t being overly stimulated, you can relax a bit . . . take a deep breath. . . hold it . . . exhale deeply. . . Let it out . . . You can fool yourself into believing any form of nonsense. This is the normal state of human affairs.

But in 2022, you didn’t get a quarter like that. This year has kicked you in the teeth as it constantly reminds you that you haven’t the faintest idea that WTF is coming next. It’s incredibly hard to pretend you know when your portfolio is constantly reminding you of the very little you’ve done. It’s hard to pretend to be prescient when you’re a front-runner for this year’s Dunning Kruger Award.

Away in double digits, nothing works and there is nowhere to hide? What happened to your sense of certainty in 2021? How did you go from KNOWING what was going to happen to ENTIRELY KNOWING?

Businessweek used to do an annual year-by-year forecast: All of Wall Street’s major economists and strategists used to compile the numbers and share their projections of where things would be a year from now: stocks, bonds, the economy, inflation, GDP, jobs , oil prices. The results were so consistently and hilariously wrong that BW eventually stopped doing it.

Economic and market forecasts tell us little about the economy or the market, but everything about the forecaster. The silver lining: when people are people who are safe, secure, and well-fed, they don’t care about insecurity. When the present makes you uncomfortable, the future nervous and you really fear for your economic security, the uncertainty monster suddenly comes to visit.

That difference between certainty and uncertainty: It’s not about whether you know what’s going to happen – you don’t know and never have. Your forecasting acumen between ’21 and ’22 is unchanged; The only thing different is your ability to lie to yourself about it.

The future is unknown and unknowable; everything is inherently uncertain and always has been. The only thing that changes from moment to moment is how your psyche processes it. 2022 was an excellent reminder of that.

See also:
There will always be wizards (Dollars & DatesJuly 19, 2022)

So far:
“Uncertainty” meme refuses to die. . (May 20, 2016)

Reunion with the uncertainty trope (June 27, 2012)

Definition of risk versus uncertainty (December 10, 2012)

Uncertainty is nothing new (July 14, 2012)

Say goodbye to your wealth when certainty prevails (November 9, 2010)

Trainee Investor: The Folly of Forecasting (June 7, 2005)

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