Financial encyclopedia

In the just-released World Economic Outlook, the International Monetary Fund (IMF) issued a warning that "uncertainty has become the new normal for the global economy." This statement reflects a reality: economic growth still exists, but the stability of the market environment has vanished. From policies, geopolitics, technology to debt risks, all factors make the future unpredictable.
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Where does "uncertainty" come from?

1. Geopolitical tensions

2. Policy directions have been inconsistent
The frequent shifts in monetary and fiscal policies in the United States, Europe and China have made it difficult for the market to predict whether the next step will be to raise interest rates, cut them or maintain the status quo.

3. Overheated valuations of technology and assets
The investment boom in artificial intelligence and new energy has pushed up market valuations, but it remains unknown whether future earnings can support such high valuations.
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The economy appears stable on the surface, but risks lurk

The latest forecast from the IMF indicates that the global economic growth rate will slightly drop from 3.3% in 2024 to 3.2% in 2025. On the surface, it may seem like a "soft landing", but the undercurrents have not yet subsided.

High interest rates, heavy debts and tense geopolitics have made corporate costs as high as market valuations.

The economy has not yet fallen into recession, but the risks have only been "delayed in outbreak", not truly vanished.
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Thinking in the face of an uncertain era

Information sensitivity is more important than speed
Blindly chasing after news can easily lead to being misled by market fluctuations. One should learn to "look at the direction, not guess the short-term."

2. Dispersion and defense are key
When all variables are difficult to control, the importance of stable allocation and risk management is higher than ever before.

3. Maintain cash and flexibility
In a rapidly changing environment, liquidity equals safety. Keeping cash and not over-borrowing is the simplest yet most effective strategy.
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Facing a market full of uncertainties, we cannot control the future, but we can control the extent of our preparations.

The "new normal of uncertainty" is a realistic reminder that when the market becomes more unpredictable, "stability" becomes precious and "flexibility" becomes a must.