For markets, there’s one thing worse than bad news

By Sam Ro from TKer

Short term, it means volatility. Long term, it may mean opportunity.

Nobody ever likes bad news.

But in markets, there’s one thing that’s worse bad news: Uncertainty.

With news, businesses and investors can at least begin to make adjustments based on tangible information, albeit unfavorable information. This applies to news ranging from sorta bad to pretty bad.

With uncertainty, or a lack of news, you really don’t know how bad things could get.

To put it another way: Let’s rank bad news on a scale of 1 to 10. It may be most likely that bad news will settle somewhere between 1 and 9. But until we can confirm that the news is somewhere between 1 and 9, then there’s a chance it could be 10 on the bad scale.

With that said, let’s talk about the Omicron variant of the coronavirus. At this point, no one can confidently tell you how bad Omicron will be. It could be weeks or months until we get that news.

For now, Omicron represents a source of uncertainty.

And when you get new sources of uncertainty, markets sell off.1