Investors often say the world has become more uncertain, and it feels true.
Inflation is less predictable. Policy is more constrained. Geopolitics appear more fragile. The comfortable assumptions that followed the 2008 global financial crisis and the Covid-19 pandemic are being steadily dismantled.
But there is a problem with this narrative. Markets have always been uncertain. What has changed is not the level of uncertainty, but our experience of it.
For much of the past decade that uncertainty was masked by policy. Low interest rates and abundant liquidity did not remove risk. They suppressed its visibility. They made outcomes feel smoother, more predictable, and more forgiving than they truly were.
That environment is receding. Institutions such as the IMF have begun to reflect a world where inflation is proving more persistent and growth less secure. Central banks, including the US Federal Reserve, are no longer able to support markets without consequence. Policy is no longer a tailwind. It is a constraint.
It is tempting, in periods like this, to believe the rules of the game have changed entirely. That a new type of insight is required. That someone, somewhere, can explain what happens next.
They cannot. The more uncertain the environment feels, the stronger the demand for forecasts, narratives and certainty. Yet forecasting has always been an attempt to impose order on something inherently unpredictable. It does not become more useful as uncertainty rises. It becomes more dangerous.
This is where investor behaviour becomes decisive. Periods that feel like regime shifts are rarely defined by the risks themselves, but by how investors respond to them. The constant flow of headline risks creates an urge to act, to adjust, to anticipate. In reality, the greatest threat to long term outcomes is not the uncertainty we face, but the decisions we make because of it.
The more uncertain the environment feels, the stronger the demand for forecasts, narratives and certainty. Yet forecasting has always been an attempt to impose order on something inherently unpredictable. It does not become more useful as uncertainty rises. It becomes more dangerous.
If the environment is more constrained, then the response is not prediction, but preparation. Preparation means accepting a wide range of outcomes is possible and building portfolios that can survive them. It means diversifying with intent, not as a default, and avoiding concentration in any single narrative about the future. It means favouring robustness over optimisation, and resilience over precision.
The world and financial markets have always been unpredictable. That is not new. What changes, from time to time, is how that unpredictability feels. There are periods when it appears as though the rules of the game have shifted, when familiar relationships break down and confidence in old frameworks begins to erode.
Whether that perception proves to be correct is not the most important question. What matters is how investors respond to it. Environments like this amplify the instinct to seek certainty and to act on it. They reward activity over discipline and conviction over humility. Yet it is precisely in these moments where restraint becomes an advantage.
The objective is not to be right about what happens next. It is to ensure being wrong does not lead to ruin. The past decade rewarded those who believed they could find the right answers.
The next will reward those who ask a better question. Not what do I think will happen, but what do I do if I am wrong.
• Luthuli is investment management director at Luthuli Capital.
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