You Don’t Have To Believe Everything You Think: Getting Comfortable With Uncertainty

Howard Marks said in “On The Couch,”

That’s one of the crazy things: in the real world, things generally fluctuate between “pretty good” and “not so hot.” But in the world of investing, perception often swings from “flawless” to “hopeless.”

We can swap “investing” out for anything where we put expectations on the future, from career changes to college choices to relationships. People translate “pretty good” to mean “flawless” and “not too hot” to mean “hopeless” when they translate future uncertainty into certainty. It’s a psychological trick we humans evolved to be good at.

Perspective and context become very valuable tools in times of psychological certainty. Our job, as professionals, is to help people understand how “hopeless” and “flawless” actually ebb and flow over time. We can only be certain we’re not going to stay in a constant state of either. If we really get brave, we can even be opportunistic and channel our inner Warren Buffett, being greedy when others are fearful, and fearful when others are greedy.

It’s hard to get comfortable with discomfort. It’s hard to cozy up to uncertainty. It’s hard to understand we don’t have to believe everything we think. And that’s what makes it a valuable skill. The ebbing, the flowing, and the uncertainty all will continue. Don’t fight it, step back and increase perspective. There’s always an opportunity when things feel most extreme, we get the challenge of finding it.