Blog: The Investing Fog of War
Unlike previous Gulf Wars, the fog is growing thicker for investors.
Investing is a game usually played in a fog of uncertainty. During periods of geopolitical instability, economic upheaval or natural disasters, the fog becomes thicker. But in the last couple of decades the uncertainty usually comes before war breaks out. Then when the event happens the fog appears to clear somewhat, and markets often soar. That's what happened in Gulf Wars I and II. But it doesn't seem to be happening in Gulf War III. If anything, the fog is getting denser.
Because of this, investment horizons remain short as predicted by the Fractal Market Hypothesis. Investors continue to react to news in a uniform way as its released. Volatility remains high. It's important to remember that even on days where the market starts down, but ends flat or up, volatility is high. Uncertainty is high. In the last two gulf wars, this wasn't the case. What's different now?