Sick of Uncertainty? Read This

How to keep your (investment) cool when the future remains unclear

Sarah Newcomb 5 November, 2020 | 8:44AM

Panic button


It’s been a long slog to get this far in 2020, and to sit in ambiguity even a moment longer feels like an impossible task to many of us. Whether it's a US election result or a Covid-19 cure, we all want some sort of resolution in this year of unrelenting upheaval and unease. But now is not the time to rush to a conclusion or bet the farm on a particular outcome. It is precisely when emotions are running hot that we need to keep our cool. 

Uncertainty is stressful. In fact, humans have been shown to prefer even physical pain to the stress of uncertainty, but we have to be careful right now to avoid making rash investment decisions that we might soon regret. Here, I’ll do my best to give you some healthy food for thought to help you keep your head while others are losing theirs (and possibly blaming it on you).

Doomsday Narratives Don’t Help

Regardless of your political persuasion, you’ve likely been inundated with end-of-the world messaging as of late. It is a common and effective political tactic to claim that “the other guy” represents an existential threat to everything you hold dear. This narrative isn’t new on the campaign trail, but this year it’s coming amid a slew of other threats to life, liberty, and property such as an uncontrolled virus, record-breaking wildfires, typhoons, earthquakes, and hurricanes, massive civil unrest, widespread unemployment, and even murder hornets! In a typical election cycle, the Armageddon trope is less convincing, but this year it really resonates.

With doomsday headlines everywhere, whichever way the race comes out, roughly half of the voting population will worry that life as they know it is over. I’m personally concerned about this because, though fear is a powerful political motivator, it doesn’t help us manage money well.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

About Author

Sarah Newcomb  is a behavioural economist for Morningstar.

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