Investment Action in the Face of Uncertainty

August 23, 2021

In my most recent post, I revealed the big secret about economic and investment forecasts—no one knows. You can forecast your brains out about all the reasons the market will have a big or bad year, or why an investment bubble will rage on or dramatically pop, but the fact is there is no certainty.

Kind of like going on vacation. There is no certainty you will reach your destination. You could choose to never go on a trip and visit a new place because of the risk, but you will miss the reward of the experience and memories made. One Stoic philosopher has been said to have put it this way, “The whole future lives in uncertainty, live immediately.”1

If you want certainty, never take investment action. You might get security (for how long though?), yet you will not get growth. You will avoid the risk and miss the reward. Most of us don’t live that way in the real world, so why would you live that way in the investment world? If you spend your time allocated with varying levels of risk to get varying levels of rewarding experiences, why not do the same thing with how you allocate your wealth? Investment inaction is an action. To riff on the Stoic, “Your future investment return is uncertain, invest anyway.”

Of course, everyone’s risk levels are different and investment allocations will diverge, but the fact that no one knows what will happen tomorrow in the stock market should not keep you from investing in it. I’ve said it before, the volatility itself is the subscription price one pays for the potential reward. Consider courageously taking investment action in the face of uncertainty.