Embracing Uncertainty (and the Personal Portfolio)

Everyone keeps saying the market is uncertain right now. When was it not?

An Allegory of Fortune, Abraham Jenssens, 17th century, oil on canvas

I’m sure you’ve seen it, too.

Every financial media outlet has covered some topic related to uncertainty and how much the market hates uncertainty.

Whether it’s war, tariffs, pandemics, surprise interest rate changes, political rows, supply chain bottlenecks, or just plain ol’ investor panic; financial journalists will go out of their way to remind us that the market hates uncertainty.

I guess I missed the memo that said the market had become sentient and developed emotions.

The market doesn’t hate uncertainty; market participants hate it. At least the ones doing risky trades and employing more leverage than is good for them. Short-term stock and options traders rely on sanguine, predictable markets. Investment bankers and M&A lawyers need low volatility to convince corporate leaders to do deals. Everyone walking up and down Wall Street convinces themselves that markets are predictable and their crystal ball isn’t black with an eight painted on it.

The market has never been certain. For as long as I have been studying businesses and observing the market, a piece highlighting the “heightened uncertainty” of the times has been published weekly.

If it wasn’t the Great Recession, it was Europe’s sovereign debt crisis, or the US “fiscal cliff”, or the politcal revolutions in Greece and Ukraine, or the Arab Spring, or Brexit, or Trade War 1.0, or the Federal Reserve threatening to raise rates, or a pandemic, or a ship blocking the Suez Canal, or the Federal Reserve actually raising rates, or Trade War 2.0, or regional banks collapsing, or….you get the idea.

I promise you this, if you are waiting for a more “certain” time to make investments, you will need to buy a second matress.

Individuals unshackled by Wall Street’s self-imposed constraints need not be worried about the market’s uncertainty. It is our ally. Times when other market participants are scared are when individual investors can thrive. You know, something about when stocks return to their rightful owners (an investing quote that seems to be attributed to, like, five famous investors, depending on which inspirational quote internet page you land).

On to the portfolio…