The Uncertainty Monster – The Big Picture

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

“There is more uncertainty than ever.”

There is a lot of uncertainty about the state of the stock market – is the bear market over, and is this rally real? How bad could it get? What is earnings? Stocks are down, bonds are down, is there a place to hide?

So much uncertainty in the market…

What is this economy about? It’s so uncertain! Will we have a recession or are we in one now? How bad would it be if we were? What about inflation: is it temporary, have we peaked yet? Will it be sticky, harmful, long lasting? Will I lose my job?

Economic uncertainty prevails…

What about the Federal Reserve? Are they behind the curve, overly aggressive? Are they subject to inflation? Provide a soft landing? Will they cause a recession? And what happens with quantitative tightening?

All this confusion about monetary rate uncertainty…

What’s going on with the midterm elections – are they really in play? What is going on with abortion rights, contraception, marriage equality? Has the Supreme Court gone rogue? Is Biden running in 2024? Who will be his VIP choice? Will Trump run? What about January 6?m Committee? Will they send the former president to the Department of Justice to indict? What will happen with the war in Ukraine? Could it be over soon?

All the best people say that there is tremendous political uncertainty…

Here’s what you need to know about uncertainty: It’s always and forever the same. The future is unknown and unknowable, inherently uncertain. You just refuse to admit it, because that reality is pretty terrifying.

I can see you doubting, so please consider last year, when everything was fine. In 2021, the counterargument goes, there wasn’t much uncertainty. Last year, you knew where you stood:

– Markets have not closed less than 5% from all-time highs;

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

-President Biden passed a covid bill and a bipartisan infrastructure bill.

Ahh, you good old days.

Which raises an interesting question: If there was so little uncertainty last year, where was the recognition of the problems in 2022? Why didn’t anyone see this mess coming?

Wait, despite the lack of uncertainty last year, you failed to anticipate the worst bond market of the century? Worst opening 6 months in the stock market in 20 years? The worst inflation since 1981? Q1 Where both stocks and bonds fell by double digits in the same quarter for the first time in 4 decades? Why did you miss it?

Because certainty, and its terrifying counterpart, is nothing more than a state of mind, an irrational belief that you know what will happen. You have a good idea of ​​the future, so you can comfortably plan for what’s next because of the lack of uncertainty.

Businessweek ran an annual year in preview: Wall Street’s chief economists and strategists crunched the numbers and shared their predictions for where things would be: markets, the economy, inflation, GDP, employment, oil prices. The results were so consistently and ridiculously wrong that eventually BW stopped running it.

Of course, this is a false belief, a completely delusional mistake inherent in the species.

All your lack of uncertainty means you feel comfortable and unsettled enough to lie to yourself about how much you believe. You pretend you know what’s coming because otherwise you have nothing to worry about. When the stock market is up 28%, you are optimistic about the future, not years or decades beyond today.

Which turned out to be complete and utter fabrication. Despite the lack of uncertainty last year, you never know what’s going to happen this year. You were comfortable in 2021 because nothing rubbed your face with how much you actually knew about the future – not markets, not economics, not geopolitics.

You knew kidley squat, forgetting how little you know about the future. When your limbic system isn’t overstimulated, that’s when you can relax a bit . . . take a deep breath. . . Hold it. . . Exhale deeply. . . Put it out. . . You can fool yourself into believing any kind of nonsense. This is the natural state of human beings.

But in 2022, you get no such quarter. This year kicks you in the teeth as it constantly reminds you that you don’t have a foggy idea of ​​WTF after all. It’s incredibly hard to pretend you know when your portfolio constantly reminds you of so little. It’s hard to pretend to be wise when you’re a leading candidate for this year’s Dunning Krueger Award.

Double digits off, nothing is working and nowhere to hide? What happened to your 2021 flavor confirmation? How did you go from completely unaware of what was going to happen?

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

Economic and market forecasts tell us little about the economy or markets, but everything is predictive. The silver lining: When people are safe, secure, well-fed, they don’t concern themselves with uncertainty. When they are uncomfortable with the present, nervous about the future, and genuinely afraid of their financial security, the monster of uncertainty suddenly comes to visit.

The future is unknown and unknowable; Everything is inherently uncertain, and always has been. How your mindset processes it is the only thing that changes from moment to moment. 2022 has been a nice reminder.

see more:
There will always be wizards (Dollar & Data, July 19, 2022)

in the past:
The “uncertainty” meme refuses to die. . . (May 20, 2016)

Rethinking the Trope of Uncertainty (June 27, 2012)

Defining Uncertainty vs. Risk (December 10, 2012)

Nothing New About Uncertainty (July 14, 2012)

Kiss Your Wealth Goodbye When Certainty Reigns (November 9, 2010)

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