Uncertainty Breeds Opportunity

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Uncertainty creates anxiety. It doesn’t have to be that way. For gamblers, warriors, and investors, uncertainty signals opportunity.

Your opponents sitting across the card table from you don’t know the hand you’re holding. Skilled players learn to take advantage of this uncertainty by bluffing their way to higher jackpots. These players accomplish this by both encouraging those with lesser hands to call their bets and intimidating those with better hands to fold. Expert poker players study how to marshall, disguise, and portray their emotions in ways to fool their opponents. That’s how gamblers win.

Similarly, seasoned generals understand the fog of war offers the opportunity to mask powerful strategies. This subterfuge often leads to overwhelming victory. Additionally, when the captains beneath those generals lead units onto unknown playing fields, they realize they cannot let uncertainty overcome the psyche of their troops. Rather, they frequently inspire those soldiers by convincing them it’s the other guys who are afraid of the darkness. That’s how warriors win.

Finally, the most prosperous investors keep their powder dry until uncertainty offers an opportunity to increase the odds of success. If you want to pay the lowest price, don’t start buying until everyone else wants to sell. This occurs when the uncertainty of future profits envelopes the mindset of the other investors. Likewise, if you can wait to sell, wait until everyone one else wants to buy. This will happen when the uncertainty of “how high the tree will grow” consumes the thinking of the other investors and they want to rush in fearing they’re going to miss a tremendously up swell in the stock price. In either scenario, this is how investors win.

If anything, based on the closing weeks of the past year, this last example speaks loudest to the reader. Market volatility increases as uncertainty increases. Sometimes, like in the financial crisis of 2008/2009, that uncertainly stems from raw economic fundamentals. Other times, perhaps like today, that uncertainly emerges as much from our own internal emotions as well as from the purposely manipulation of those with less than altruistic intentions.

Don’t, however, succumb to the intimidation of those you imagine pull the puppet strings of the economy, your job, or even your own personal life. Like the captains referenced earlier, allow me to convince you it’s those string-pullers who face the greatest uncertainty.

Here’s why.

The more vested they become in fashioning a ruse to fool you, the greater their anxiety of you discovering that ruse. And once that ruse is revealed – and, like all ruses, it eventually will be revealed – it will be you, not the provocateur, who lands the upper hand.

That’s the thing they fear the most. The fear of being discovered, of being unmasked, of having been found to have committed a fraud, no matter how small.

Shakespeare showed us how to identify when someone is trying to pull a fast one on us when, in Act III, Scene II of Hamlet, he has Queen Gertrude say, “The lady doth protest too much, methinks.” Queen Gertrude (a.k.a., Hamlet’s mom) refers to a character within a play they’re watching. Ironically, her protest divulges more of her own foibles than that of the fictional character she’s commenting on.

You might recognize this behavior as “projection.” We generally see projection regularly in dramatic productions. It is a common use of situational irony used by authors, playwrights, and screenwriters.

As they say, “it’s funny because it’s true.” Although a much-employed tool by writers of fiction, projection is very much a real-life phenomenon. You’re likely to see projection practiced with perfection by your favorite Washington-based politician or national activist organization.

Why does this work so well?

Recall what has been said about the greatest fear of the provocateur – being discovered. It turns out, we all project to one degree or another. For example, we’ll accuse someone of “being obese” to cover-up our own concerns about our own weight. Or we might scorn someone for “acting stupid” to justify our own ignorance. Imagine how uncomfortable you’d feel if people knew the true reasons behind your feelings?

It is this fear of being discovered a fraud – or “Imposter Syndrome” – that manipulators seize upon. Imposter Syndrome isn’t necessarily a bad thing. In fact, most people probably experience it to one degree or another. The more successful you are, or, more importantly, the more successful others expect you to be, the more likely you will suffer from Imposter Syndrome.

If you’ve ever felt like “a fake,” or felt the only reason why you’re where you are is because you’re “lucky,” then you might have experienced Imposter Syndrome. Face it, this could apply to all of us. That makes us vulnerable.

And don’t you think manipulators don’t know that. It is our uncertainty about ourselves that they prey upon. This uncertainty leaves us quite susceptible to feelings of guilt. When we feel guilty, we naturally tend to overcompensate in the opposite direction. In effect, we “protest too much.”

Hmm, sounds like that Shakespeare guy knew what he was talking about.

“OK,” you’re probably thinking, “you’ve shown me how the bad guys have an opportunity to take advantage of me because of my own uncertainty. Now explain how I can use this uncertainty to capture my own opportunity?”

I won’t take credit for the answer, or even the headline of this Commentary. Sun-Tzu, in his seminal The Art of War, says “In the midst of chaos, there is also opportunity” That’s a smarter way of saying the title of this piece. But it is this advice from him that answers the question: “To know your Enemy, you must become your Enemy” because “If you know the Enemy and know yourself, you need not fear the result of a hundred battles.”

Remember, those that wish to take advantage of your uncertainty have uncertainties of their own. Adopt their strategy as your own and turn the tables on them. That’s where your opportunity exists.

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