My Sunday Washington Post Business Section column is out. This morning, we look at one of our favorite old themes, Uncertainty.

The print version had the full headline The ‘uncertainty’ meme reveals how little we really know. (The online version is merely There’s nothing new about uncertainty).

Here’s an excerpt from the column:

“Since then, the uncertainty trope has become the general catch-all for explaining (or mis-explaining) a variety of future events. The list of uncertainties is long: The fiscal cliff, U.S. tax policy, health-care laws, what happens in Greece, will we have a recession next year or not, is housing recovering, what happens to the euro zone, will the euro currency collapse, what about the U.S. elections?

I recall no one saying that investing was difficult due to the uncertainty caused by a potential nuclear conflagration between the United States and the Soviet Union during the Cold War. The sword of Damocles hung over everyone’s head. Is the Greek situation today more dire or uncertain than the policy of mutually assured destruction ever was?”

I really like what the Post did in the dead tree version of the paper — the layout and art work is great:
click for ginormous version of print edition


The ‘uncertainty’ meme reveals how little we really know
Barry Ritholtz
Washington Post, July 8 2012

Gx6-11 (PDF)

Category: Apprenticed Investor, Psychology

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

10 Responses to “Uncertainty = How Little We Really Know About the Future”

  1. Richard R says:

    The certainty that some are seeking may be the certain knowledge that the government will act 100% in favor of their particular special interests, 100% of the time.

  2. Winston Munn says:

    Terrific article, Barry. The crux of the matter comes in two key sentences:
    “….we construct a reality that bears only passing resemblance to the objective universe.”
    ” That’s when the grim reality of the human condition is revealed — and it terrifies us.”

    Whether it is belief in religion, alternative medicine, or The Invisible Hand of Capitalism, humans create all sorts of make-believe scenarios to resolve intractable problems – because of fear.

  3. Rick Caird says:

    Barry, There is a difference between uncertainty and confidence.

    I was just reading an article on ZeroHedge about the Fed being out of ammunition going into a recession and that got me to thinking about this column. I expect earnings will be OK over this month’s cycle, but it is because business is still hunkered down, keeping expenses low, and shunning higher risk investments. They are doing that, not because of uncertainty, but because of lack of confidence that the future will be OK.

    It is much easier to live with uncertainty if we have confidence. Without confidence, uncertainty leads to inaction.


    BR: I read that same article on ZH in 2009, again in 2010 and again last year!

  4. VennData says:

    An example ofa journalist who knows even less…


    “… For the “numbers people” out there, 100+ years without winning the World Series means that odds would appear to be imminent that the Cubs are due for a World Series…”

    Uh… no. What sort of “numbers people” did the author speak with? People who track the dice throws at a crap table type ‘numbers people.”

  5. willid3 says:

    if uncertainty explained every thing that many use it for. how do they explain how any current major company ever got started? because there was a lot of uncertainty that Boeing (just one example) was every going ‘take’ off back when it started. or Lockheed, or any number of a 1000 other companies. but it seems that those companies did invest and were able to over come the uncertainty. i.e. they over came their fear. and consider we can’t predict what will happen Monday, let alone what will happen next week, next month, next year, or 7 decades from now,

  6. Joe Friday says:

    Anybody who trots out this “uncertainty” nonsense on national TV should automatically get a pie in the face.

    If you owned a widget factory, and there was rising demand for widgets, it would not matter what the deficit will be, it would not matter what the tax rate will be, it would not matter what the interest rates will be, and it would not matter what happens in Europe. You would expand your business, hire more people, ramp up production, meet the demand, and make more profit. If you didn’t, somebody else would.

  7. willid3 says:

    and isn’t that what business is about? selling more and more to more and more customers? all of the other stuff are side shows. but we are constantly told they are more important than the former is by those selling a position that helps some at the expense of all

  8. ToNYC says:

    We’d all be better off looking for Certainty in History and to the degree one searches for such a dreadful fantasy of knowing what will happen is the degree that one is absent from doing the best thing now while the cameras are actually rolling and you haven’t paid for the set and extras. The very best investment that pays dividends in perpetuity is selling Heaven calls as far as Buffet can see.

  9. victor says:

    Great read, BR. Uncertainty is about the future which man has only partial control via our free will. The rest is controlled by chance and here’s 1 Corinthians 2:11:

    For what man knoweth the things of a man, save the spirit of man which is in him? even so the things of God knoweth no man, but the Spirit of God.

    And how many people today confuse risk (probabilistically known) with uncertainty (we just don’t know)?

    PS: for seculars, pls. replace the word God with Plato’s “chance”.

  10. 873450 says:

    Another uncertainty meme:

    How long can we keep getting away with everything we’ve done before 99% takes up pitchforks?