The certainty of uncertainty

It is often recorded that nothing is worse for a market than uncertainty. This applies to stock markets, commodity markets, and equally property markets. There are many other examples of this. The uncertainty surrounding a potential new wind turbine will never be as bad (for values) as the reality once the turbine has been constructed and operational. Indeed there has been much evidence of this in Cornwall in recent years.

As a prime example at the present time, I wonder whether whatever ‘Brexit’ turns out to be, will it be as damaging to the economy and markets as the uncertainty we have now. There is plenty of precedent to suggest not.

For most of us, life goes on regardless. Businesses keep striving for growth, and indeed many CEO’s and entrepreneurs are reporting excellent trading and are getting on with growing their businesses. Similarly, many firms are still being successfully bought and sold, and releasing capital - which often feeds into the Cornish prime property market.

Once ‘Brexit’ is behind us one way or the other, then it won’t be long before there is another uncertainty on the horizon to be distracted by. Perhaps an election here, there or wherever. It is what’s often referred to as ‘white noise’. But are we to put off big decisions indefinitely while these events and associated periods of uncertainty come and go – with certainty!? Times of heightened uncertainty can lead to great opportunities for investors who position themselves to take advantage of it. So when many of us are distracted by the ‘white noise’ and waiting to see what Brexit turns out to be, many successful, experienced contrarian investors are keeping calm and carrying on.

Those experienced investors know about the impact uncertainty has on markets. Warren Buffet said, “The future is never clear. You pay a very high price in the stock market for a cheery consensus. Uncertainty is actually the friend of the buyer of long-term values.”