You know nothing! But that's fine...
Investing through the rearview mirror is easy.
When you look at even the past ten tumultuous years - from complacency before the financial crisis, to fears that the ATMs might stop working, to the bull market that followed the crash, and to the low rates that helped it along - each stage seems inevitable.
Of course, it was "obvious" this or that would happen, Internet pundits and the bloke in the pub will tell you.
Yet strangely - even for these wise sages - what happens next is always a mystery.
Truth is it's never obvious. Not unless you're reading a stock market history book and you already know how it ends.
- It wasn't obvious governments would step in to save most of the banks in 2009, or that their intervention would work, or that many of those banks would be reporting huge profits in 2017.
- It wasn't obvious that interest rates would fall to near zero and stay there for nearly a decade.
- For that matter it wasn't obvious rates would start falling from double-digit levels in the 1990s and continue to drop for 30 years - a marathon bull run that makes the current advance for equities look like a short sprint.
- It wasn't obvious Steve Jobs returning to Apple would save the struggling firm, or that it would successfully launch the iPhone, or that Apple would sell over a billion smartphones and become the world's most valuable public company.
- It wasn't obvious Warren Buffett's purchasing quality brands like Coca-Cola would deliver strong returns, or that he wasn't a has-been when he spurned the Internet bubble in the late 1990s (and avoided the subsequent bust).
- It wasn't obvious 50 years ago that cigarette makers would go on to deliver the best long-term returns of any sector of the market - when we knew their products killed their customers, and some of them had already begun to sue.
The list goes on.
Pick your winners
Of course we can only invest for profits in the future, not the past.
You might wonder then why I'm raising all this ancient history - let alone pointing out how unclear the outcome was.
I think it's important to know that those who invested before us were just as clueless about precisely where things were headed as we are now
The times were never simpler. They only look that way in retrospect.
This should give you heart when facing some of the thorniest debates today. For instance, here are three current investing battlegrounds:
- The future of oil and the oil price
Most Fools will know the price of a barrel of oil crashed from over $100 in 2014 to below $30 by early 2016. Even today it sits below $50. This slump has caused huge ructions in the sector, and disrupted a trillion dollars of investment. That could mean a future oil shortage is guaranteed.
Or does it? Could US shale oil plug the gap? Will electric cars crush the demand for petrol anyway? Even Royal Dutch Shell's own CEO says his next car will be electric. Energy is a critical sector where huge companies keep the modern world turning - yet some serious investors think these issues mean those companies are already un-investable for the long-term.
- Low interest rates and high stock market valuations
Since the start of this bull market back in 2009, pessimists have decried it as the side effect of easy money from central banks. At first they expected it to pop at any moment, but as the years passed and their credibility waned, they looked to the prospect of rising interest rates as the trigger for a collapse.
Well, the US has been - slowly, tentatively - raising rates for a couple of years, and its indices are at all-time highs. Oops! There's no doubt that shares on a pricey P/E of 30 make much more sense when cash pays you nothing and bonds a pittance. So who will win this tussle?
- Domestic companies and Brexit
It's no secret the UK's decision to leave the EU has been politically divisive. Perhaps unsurprisingly, it's also split opinion in terms of the investment ramifications.
While most of the largest FTSE 100 firms have substantial overseas sales to cushion any difficulties, many mid- to small-cap companies are directly exposed to the UK economy. If Brexit is a triumph, they could prosper. If it triggers a recession followed by years of stagnation, UK small caps could be dire investments.
How these questions (and others) are resolved in the months and years ahead could be the difference between beating or lagging the market.
More importantly, it might make a material difference to your bottom line - or even how well you live in retirement.
Yet right now, I'd say that after balancing up all the evidence for any one of them, you might as well flip a coin to decide the outcome. To me, they could all go either way.
This is not a reason to avoid investing - because, as I've said, such uncertainty is always with us, at least outside of a history class.
But it is a reason to be hungry for knowledge, to be humble about our ability to predict the future, to aim to be nimble and flexible in our thinking, to be hopeful...
...In other words to stay Foolish!
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