It's a well-worn maxim that uncertainty is bad for financial markets.
Financial markets weren't expecting Brexit.
So naturally Brexit -- and uncertainty -- must be to blame for an historic global stock-market tumble that began after the British vote last week to leave the European Union. Even though the selling paused Tuesday as most markets rebounded a bit, trading in the first two days after the vote led to horrific losses that vaporized some $3 trillion in wealth.
The drumbeat of headlines from Google News only confirms the correlation, with tens of thousands of results that pair "Brexit" with "uncertainty." A sampling:
"Brexit + deep uncertainty = market chaos" (CNNMoney)
"Brexit for Traders: The Good, The Bad, and the Uncertainty" (Forbes)
"Technology firms cope with uncertainty after Brexit" (The Boston Globe)
"Auto stocks continue to reverse on Brexit uncertainty" (Investor's Business Daily)
And for good measure: "Brexit casts uncertainty on art market" (The New York Times)
But what if uncertainty isn't the problem at all? Maybe Voltaire was right: "Doubt is not a pleasant condition, but certainty is absurd."
Rarely has the cliché that markets hate uncertainty proved so ... expensive. But it's also meaningless. Of course, markets are uncertain. Everything is uncertain but death, taxes and lousy punditry.
The more insidious threat to financial markets is certainty. Certainty that the British wouldn't really launch a ballot-box kamikaze mission with the potential to wreck their own economy. Certainty that U.S. home prices would rise, year after year, without fail. Certainty that Republican primary voters would never embrace Donald Trump as their standard bearer.
Just as a weather forecaster must continue to guess the weather lest she wind up out of work, market prognosticators must point the finger somewhere when they're wrong. Blaming uncertainty is at least as reliable an excuse as Mother Nature.
Over-analyzing uncertainty is also an appealing pastime for analysts. A recent Bank of America Merrill Lynch report noted Fed Chair Janet Yellen used the word "uncertainty" or "uncertain" 15 times in her most recent speech, more often than prior speeches.
The report's title: "The only certainty is uncertainty."
The same investment bank in mid-June found little uncertainty regarding Brexit: Two-thirds of the fund managers it surveyed considered Brexit either unlikely or not-at-all likely. Even betting markets predicted (with 85 percent confidence!) that British voters would opt for Remain, despite polls suggesting a movement toward Leave starting in June. Money managers were also unfazed, bidding up stocks on the day of the vote, rushing clients headlong toward the chopping block.
The lesson: Bet against certainty.
Out in the real world, the flow over time of Internet searches for "uncertainty" suggests uncertainty persists year-round without any particular regard for market fluctuations -- even big ones like the Great Recession. Americans reliably type "uncertainty" into their search bars a bit more in the fall as they assess the year ahead and a bit less in the summertime.
Uncertainty is just life -- not some ebb and flow measured by the experts.
Or as Einstein put it: "As far as the laws of mathematics refer to reality, they are not certain; and as far as they are certain, they do not refer to reality."