You’ll often hear folks like us say that investors or markets “hate uncertainty.”
And that causes market drops and volatility.
Why do we hate uncertainty so much?
Good news! We’re here with the antidote to fear and uncertainty. We’re going to talk about how we can look past our initial reactions and embrace the power of uncertainty.
Let’s start by answering a basic question: 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.
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If you have a question about what we’ve discussed with you or you’d like to speak personally about what’s going on, please email us at yourteam@mmwealth.com.
Source: https://www.theguardian.com/commentisfree/2016/apr/04/uncertainty-stressful-research-neuroscience