An Argument for Nuance

December 12, 2022

I write in nuance.

Sentences composed of qualifiers. Rarely (see what I did there?) will you see words like certain, absolutely, guaranteed and the sort in my blog posts and newsletters.

Annoying? Maybe.

“That guy always has an out somewhere,” you might say. “He makes it sound like the markets may have bottomed and then shows us that it may not have.” The cynic might even say, “He speaks out of both sides of his mouth.”

Easy there.

Here’s the deal though. Not only are there compliance reasons for doing so, but this is also just the way markets work. The financial world is full of surprises. Stocks go up higher than you think or crash worse than you expected. Good news happens that proves pessimists wrong. Bad news happens suddenly that makes optimists look foolish.

Even the Federal Reserve (which has a lot more information than you and I do) gets it wrong, as has been shown via its handling of inflation. Forecasting even for the Fed is hard. This straight from the Fed Chairman’s mouth around this time last year: “You know, forecasting is not a perfect art, as you may have noticed.”1 At least he admits it.

There is a kind of self-righteousness in financial forecasting, and a lot of money too. People pay other people for all the answers. The sad thing is sometimes people keep paying them even when proved wrong. The currency of certainty sells like hotcakes. (Is there still money in pancakes?)

And so goes life. Having all the information doesn’t make you wise in investing or life.

Think over your year. Did 2022 go exactly as you thought? Did your kids, your job, your marriage, your savings, your trips, and goals all go and execute according to your plans?

Probably not.

Likely there was joy and sadness, success and stupidity, ordinary and extraordinary. Life is certainly unpredictable. Markets are too.

Ahhh… the voice of certainty.

To be an investor you must plan for the unknown and unexpected happening. You don’t know what you don’t know. What you think you know just might blow up in your face. You reap what you sow. What you never expected just might happen and bless your socks off.

2023 is coming. Consider ignoring the forecasts of doom (or bliss). Act - don’t overreact. Plan - don’t predict. If you stay consistent to your investment plan, it will likely pay off.

Yep, there are those cursed qualifiers again.

I love the smell of nuance in the morning.