That Doesn’t Work Anymore

Chapter 35 Uncertainty—The Opportunity

A good joke and a good horror movie both depend heavily on the unexpected. Markets are not as entertained by the unexpected and can react violently when the unexpected resets the level of uncertainty. Volatility occurs when asset values move up or down. Increased uncertainty tends to only impact asset values in one direction and that is down. Uncertainty reduces asset values and can immobilize the decision process. Eventually, however, new levels of uncertainty are like a bad smell in a room. It takes time, but people adjust to it, and it becomes the norm. If there is not a certain level of uncertainty associated with an investment there would not be opportunity.

With the global economy going through a rapid ...