Qualified advisers answering your
Financial Questions
call 0800 092 1245

Why does confusion and uncertainty affect stock markets?

Over the last few months, both before and after the general election, uncertainty has had a massive impact on stock markets around the world and especially the UK. But why does confusion and uncertainty unsettle investors so much?

In order to value any share or any asset there needs to be an understanding of the potential growth in the future, demand and supply. If any of these elements are uncertain then it is almost impossible to forecast the value in the short, medium or longer-term. The UK economy is a major element of any financial forecast and if investors know the short-term will be difficult while perhaps the medium-term will be positive then an estimate on the current and future value of any asset is not too difficult. While nothing is ever certain, the more elements which are "visible" the more chance of arriving at a believable value.

However, if one or more of these elements are uncertain then it is very difficult if not impossible to forecast the future value of any asset and this is where investor confidence could potentially take a big hit. In times of uncertainty many investors will look on the downside and this can lead to significant reductions in stock market indices which can trigger more selling and more concern which can lead to a vicious circle.

Share this..

Related stories

Financial Guides

Financial Calculators

Our useful calculators can help you get your finances in order:

Latest News


Helpful new tax year facts that could affect you and your money

Blog | Seven helpful new 2016/2017 tax year facts that could affect you and your money. Our recent online blog shares a brief outline on how to stay up to date.

Read more

Useful Links

Popular Searches

Please Enter More Details

Enter More Details