It is, according to the current law of the land, now less than a month until the UK leaves the European Union – 29 March must surely be etched into the mind of the nation by now. Whether this happens or not is a matter for a parliament in which chaos reigns – I challenge any one to tell me with any certainty what the status of the UK will be on the 30th.
Whatever the case, there is a growing view that we should just get on with it – because it’s the uncertainty that is the current problem, perhaps more so than the possible outcomes. Indeed, while we are often told that ‘no deal’ represents the greatest uncertainty, we should remember that for much of the past two years the expectation has been that there would be some kind of Brexit-softening deal with the EU that would mean business as usual to a large extent. Yet many companies have still been hesitant to invest.
Away from broader national economic concerns this has particular relevance for investors, for whom it is often said that uncertainty is the enemy. There has always been something that has troubled me about this trope, in the same way that I have a real problem with the related idea that has crept into many corners of regulatory thinking that private investors should be protected from risk.
Uncertainty is not so much the enemy as a fact of life. We do not know how long our retirements will be and how much money we will need to enjoy them comfortably. And we do not know what stock markets or bond prices will do as we strive to build our pots, or indeed that we will always be able to pay into it as much as we need to, whether through illness, unemployment or something entirely unexpected. While we hope for the best we should also plan for the worst – as one would expect companies to do in respect of Brexit.
Meanwhile, we do know that unless we embrace the higher risks that come with equities we are unlikely to ever achieve the pot that we need. And that it is precisely because we can never be certain what the future has in store for companies that this risk exists. Indeed, the story of human progress is one of embracing the risk that comes with leaps into the unknown – progress that has helped all of us enjoy greater wealth and better lives. As we head into another unknown, investors should remember that risks should be assessed and managed, not avoided altogether.
