Like humanity itself, financial markets exist is a state of perpetual dissonance, with prices driven by ever-shifting narratives and perceptions that are often only loosely connected to the realities and the facts. Few of the prevailing narratives ever unfold as expected and the majority of perceptions inevitably prove to be false. Why? Because in a world of Volatility, Uncertainty, Complexity, and Ambiguity, no one can predict the future. All we can do as investors is to try to assess the probabilities and pay-offs of alternative courses of action.

In a VUCA world, the key to success is to ide...