I can quite honestly say as an investor for over 26 years now that I have never experienced a dull day, but that said, there is a Chinese curse, which says, “May he live in interesting times.

As investors we must embrace the uncertainty of life. Unfortunately, due to our evolutionary wiring and here I am referring to how our brain reacts intuitively to perceived threats with a fight, flight or freeze response is a disaster for successful investing.

As investors we seek certainty in a world of uncertainty, this conflicts with a fundamental principle of efficient markets and that is that you have opposing views for every transaction, opportunity and / or threat in the market.

The recent Naspers / Prosus share swap offer is a good example of opposing opinions, those for and those against the offer, by equally informed and smart investors. The global debate iro current inflationary pressures being transitory vs. entrenched is one of the most important considerations for investors with the attention of the smartest people on the planet, yet the outcome remains uncertain. The list of unknowns is endless, SA politics is another example of a critical factor with binary outcomes for investors with no clear view. Futurists like to attach probability percentages to the various scenarios, but nobody really knows what the future holds and anyone claiming to know is a charlatan.

Investors must accept that there are no “free-lunches,” and they will make mistakes. The most successful equity investors in the world only get four out seven stock picks right. If you are waiting for a sure bet or the “light to turn green” before committing to an investment, then maybe investing is not for you. The best investment opportunities usually come at times of greatest uncertainty and always feels uncomfortable.

Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of humankind.

 

Mark Williams
Mcomm, CFP®, HdipTax
T. 021-205 1133
Email. service@mwwealth.co.za

 

Negotiating uncertainty