Uncertainty is an interesting beast

Life would be less interesting if we knew how everything would turn out in advance. However, the same factor of the unknown that makes investment markets nervous is what makes investing attractive in the long-run. Unpredictability can cause asset prices to drop, but is also indirectly what pushes prices higher when good news occurs and fear diminishes.

Over the last year, surprises included continued slow global growth, the first interest rate hike since 2006, Brexit, and continued instability in the Middle East. But hang on to your hats, because 2016 isn’t over yet. Surprises could occur with economic data, US rates hikes, Central Bank policies outside the US, the constitutional referendum in Italy and its impact on the euro, and of last but not least… the U.S. presidential election.

No one can reliably predict the outcomes to the above. Yet, it is important to view and accept uncertainty, given that panic-investing and chasing the “hot dot” often creates worse results in the long-run. As always, money needed for short-term spending shouldn’t be in the market anyway, whereas investments for your long-term plans are often best left in your long-term investment strategy.