“Our greatest motivation in life comes from not knowing the future.” (Thomas Frey)
Investing is an exercise in uncertainty. When you make any investment, you are taking a bet on the future.
This can be a hard thing to do. Markets move up and down, economies shift, and geopolitics can make everything feel unhinged.
At least, that’s how it feels in the moment. At any given time, there’s always something to worry about.
Yet, when we look back, things can seem very different. For example, if you’d been invested in global stock markets over the past 15 years, you would have done incredibly well. From today’s vantage point, it’s easy to say you made a great investment that has gone up in pretty much a straight line.
But, in reality, there were plenty of moments along that journey when things would have felt unbearably uncertain – after all, this period includes a global pandemic, wars in Europe and the Middle East, and five instances where the market fell more than 20%.
Making good decisions
Given how things have turned out, it’s easy to forget now the kind of anxiety those events caused at the time. After all, we now know that none of them permanently disrupted the upward trajectory of the market. As finance writer Morgan Housel points out, we don’t feel that stress, because we know how the story ends.
But for anyone navigating today’s market turbulence, uncertainty is all too real. South African investors have been watching global markets react sharply to every comment from the new American president, and even what he says about South Africa. This is hard to stomach, because we don’t know how things will turn out.
We have to, as Housel puts it, “manage the psychology of uncertainty”. Because, to some extent, all investors have to accept an unknowable future. The best we can do is look at what has happened in the past.
And what the past tells us is that the real challenge for investors is not just making good investment decisions, but managing the emotions that come with them. Those who are able to sit out the difficult times, stay invested, and let compounding work in their favour over time have always reaped the rewards.
Navigating uncertainty
With that in mind, here are some practical strategies to help investors navigate uncertainty without falling into emotional traps.
1. Acknowledge that uncertainty is normal
Market uncertainty isn’t a temporary phase – it’s a permanent feature of investing. There will always be reasons to worry, whether it’s interest rate changes, economic downturns, or political developments. The key is to recognise that uncertainty does not mean doom. Markets have historically rewarded long-term investors who stay the course despite short-term fears.
2. Focus on the long term
Short-term market movements can feel overwhelming, but they are often just background noise in the overall symphony. Looking at a long-term market chart shows a steady upward trend, despite numerous corrections and bear markets. If you’re investing for retirement or wealth accumulation over decades, what happens over the next six months is far less important than your overall strategy.
3. Tune out the daily noise
In an age of instant news and social media, it’s easy to get caught up in every market-moving headline. However, reacting to daily news cycles can lead to poor decision-making. Instead of following every fluctuation, focus on the fundamental reasons you invested in the first place.
A practical step is to limit how often you check your portfolio. The more often you look, the more volatility you will see.
4. Reframe how you think about risk
Markets moving up and down over short periods of time may feel disorienting, but it isn’t risk. The only real risk you face is not meeting your investment goals over time. Remind yourself that downturns are a normal part of market cycles, and of investing. Historically, markets have always rebounded.
5. Seek professional guidance
Investing can be overwhelming, especially during periods of heightened uncertainty. A financial advisor can provide an objective perspective and help you stay aligned with your long-term goals. If you find yourself second-guessing your investments frequently, consulting a professional can give you peace of mind.
The bottom line
Uncertainty is an unavoidable part of investing, but it doesn’t have to be a source of anxiety. By accepting that uncertainty is normal, maintaining a long-term focus, and using disciplined strategies, South African investors can navigate volatile markets with confidence. The key is not to predict the future, but to prepare for it – and to stay the course despite the inevitable ups and downs.
If you have absolutely any questions about your investment portfolio, please give us a call.
Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact us for specific and detailed advice.
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