When faced with uncertainty, investors delay

“Investor behavior in recession is . . . a cautious probing, an avoidance of commitment until the longer run status of both the national economy and the investor’s own fortunes are better known...by waiting, the potential investor can improve his chances of making a correct decision.”

- Ben Bernanke quote from the Undercover Economist "Uncertainty delays investment. If only UK government grasped this"

Uncertainty harms. It is not a direct harm, but a harm of timing. Increase uncertainty and most will react through delay. Why commit today if you can put-off until tomorrow? Growth delayed is growth denied. This applies to policy uncertainty and the overall real economy uncertainty. If there is a threat of recession, delay. If there is unclear inflation, delay. The delay can be waiting on investment projects, making projects smaller, or scrapping the projects. It could be ordering less. It can mean buying less. For investors, it can mean averaging into projects. 

Who wants to make a mistake during a period of high uncertainty? Wait for the time to pass. Of course, there will be winners based on those who act. We will often read about those who act. We will not read about those who delay. Is there a neat solution for dealing with uncertainty? No, we must accept this reality.