Making sense of randomness

Global markets have felt wildly unpredictable for months now, particularly since January 2025, when Donald J. Trump assumed the U.S. presidency for a second time. His return to the White House appears to have added fresh layers of uncertainty to a world already reeling from multiple crisis points—ongoing conflicts in Eastern Europe and the Middle East, economic stagnation across Western Europe, Asia and Latin America, and intensifying climate challenges. As a result, market movements today often feel so erratic that making credible forecasts about future trajectories has become nearly impossible.

It’s no wonder that forecasts for commodities, equities, cryptocurrencies, currencies and bonds are so scattered that many sound like wishful thinking rather than grounded analysis. This resembles a room full of blind men trying to understand the universe by touching whatever object lies closest to them—a method with a painfully low probability of success.

Recently, diverse events like political developments in Japan and Korea, nomination of the next Chairman of the US Federal Reserve, civil unrest in Iran, declassification of Epstein files, coup in Venezuela, ceasefire in Gaza, and speculations about some rift in GCC, etc. have had material impact on the prices of precious metals, energy, base metals, currencies, equities, and bonds.

What makes this moment even more precarious is the apparent weaponization of the U.S. dollar. The United States has increasingly used its economic might to pressure geopolitical rivals (such as Russia, Iran and Venezuela) and strategic competitors like China. Meanwhile, China’s dominance in rare earth minerals further complicates global supply chains and economic leverage. In response, several central banks have accelerated efforts to reduce their holdings of U.S. dollars, increasing gold reserves and exploring alternative settlement mechanisms for cross-border trade. This trend is reshaping the global financial architecture in real time—adding new volatility vectors for investors to navigate

On top of geopolitics and macroeconomic policy, the breathtaking pace of technological evolution—particularly in artificial intelligence, renewable energy, and supply chain digitization—is another major factor influencing markets. These developments not only create new winners and losers across sectors but also introduce uncertainty about future earnings, labor markets, productivity, and long-term economic growth dynamics..

Some of the best-performing equity markets over the past year seem to defy economic fundamentals. For instance:

·         South Korea’s KOSPI has surged strongly,

·         Japan’s Nikkei has likewise posted impressive gains, and

·         Brazil’s market has also shown remarkable strength

Yet economic growth forecasts for these countries remain muted and demographics are deteriorating. Even markets like Pakistan’s have climbed despite chronic economic headwinds and weak GDP growth prospects. These divergences highlight a growing disconnect between market exuberance and underlying economic reality.

In this environment, traditional approaches to asset allocation—balancing debt, equity, precious metals, cash and alternative assets—feel inadequate. Diversification strategies across regions, sectors and currencies are no longer guarantees of risk reduction. Correlations between asset classes can shift quickly and unexpectedly, leaving even sophisticated portfolios exposed to abrupt repricing.

Under such circumstances, the most rational response may not be confident prediction but humble adaptability. Recognizing that random, chaotic forces are increasingly influencing markets might help investors design strategies that are more resilient and flexible—ones that emphasize risk management, scenario planning, and tactical rebalancing over rigid forecasting.