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Uncertainty

People deal with uncertainty in very different ways. We all see this around us no matter where you are.

A good analogue is the stock market: uncertainty drives the price of a commodity down. Almost without fail as soon as the uncertainty goes away, the price goes up. Not only on good news, but even on bad news in many cases. Somehow the market gets it wrong almost all the time. The potential for bad news has already in priced into the price at an inflated amount, not a sane and reasonable amount.

Whenever you encounter uncertainty, it’s critical that you look at things objectively. What are the possible outcomes? What’s the upside? What’s the downside? How likely is each? It might help to write it all down or even put it in a spreadsheet.

I know it’s hard when the subject of the analysis is yourself — if things turn out on the bad side you will personally feel the pain. If you cash out in a down market just because things might get worse, all you did was lock in all of your losses. If you don’t do anything and the ship is sinking, well, the lowest you can go is zero. Conversely if you stay in while everyone else is getting out then things change, well you look like a freakin’ genius.

It is hard to look at yourself critically, but you’ll be better off because of it. It might be hard to just “ride it out” with the cloud of the unknown hanging over your head — but if your analysis points to a bigger upside than downside then that’s what you should do.

It’s all a bet in all cases though.

Just make sure you don’t bet against yourself.

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