#uncertainty #unpredictability #investing #tariffs #InvestmentClimate
How does one invest in a time of uncertainty, as we are in now?
Betsey Stevenson, economics and public policy professor at the University of Michigan, and former chief economist at the U.S. Labor Department, discussed this on MSNBC’s “All In with Chris Hayes on May 15, 2025.
She basically said it was difficult for investors and businesses to plan when things change so frequently.
She and other economists consider this time “uncertain,” as tariffs are implemented, adjusted and/or paused almost daily.
In fact, most investment climates, save for mattress money or insured bank accounts, are “uncertain.” Investors do not know for sure whether the risk(s) they are taking will pan out. They can judge, based on fundamentals and research, the likelihood of an investment panning out.
They also can judge the economic climate to see whether their decisions are more or less likely to pay off.
But, as with all risks, there is always a chance of an investment not proving worthy.
A pandemic, a natural disaster or other unanticipated circumstances could suddenly affect the investment performance.
Or, the company or venture in which one is investing could fail because of human error or mismanagement that one may not foresee.
So, all investments, no matter the climate, are uncertain.
What is happening today makes investing more unpredictable.
Investors are unable to forecast, even if the entity is a good risk on its face, whether the investment pays off.
The purpose of tariffs, essentially, is to urge companies to import less, and make more things in the U.S.
There are myriad problems with that. First, it takes many years for a company, if it were to decide to make more things here, to set up the capacity to do it – build or convert a factory, hire the right people, buy the needed equipment (perhaps from a foreign maker) etc.
Who knows what would happen to the tariffs during that conversion period.
Secondly, there are things that we just can’t grow in the U.S. Bananas are tariffed, yet we do not have the climate to grow them. Coffee is tariffed, but Hawaii is the only state that grows coffee, and it doesn’t grow enough to satisfy nationwide demand.
Thirdly, other countries can make many things better and cheaper than we can here, no matter what we do. We do things well, they do things well, and that’s why we trade.
So, the next time an economist calls these times “uncertain,” they’d be more precise to call these times “unpredictable,” because the “uncertainty” is deliberately created by one person – who is unpredictable.
Peter