This is an exciting time to be an investor, but it’s also a very uncertain one. Risks to both the upside and downside are much higher than they were even a year ago.

Take the US tech bubble of the 1990s, add the subsequent real estate bubble of the 2000s, multiply by two, and you have a good approximation of the events leading to Japan's stock market crash in 1990. The Nikkei stock index rose more than 900% in the 15 years before it finally topped. It was a frenzy powered by a belief that Japan Inc. was on its way to taking over nearly every major industry worldwide. The stock market bubble was further fueled by a massive real estate bubble at least twice the size of the one the US experienced in the 2000s. Tokyo alone became more valuable than all the land in the US. In short, it was the product of a tsunami of monumental and concurrent events that are unlike anything present in the US today.

As we observe events in realms such as financial markets, politics, or weather, we tend to form beliefs — be they explicit or implicit beliefs — about cause and effect, or whether the events were positive or negative, good or bad. Science has formalized this process: testing a hypothesis with empirical data. One of the tradeoffs when evaluating beliefs in light of evidence, or a hypothesis in light of data, is the type of error we would prefer if our beliefs turn out to be wrong. In the investment realm, this bias can affect our beliefs and behaviors, such as our tolerance for risk and our allocation choices. Several examples will help illustrate this point.

A bit of volatility returned to Wall Street, with indexes pulling back from record highs and the leading sector performer to this point in the year, technology, experiencing a decent-sized pullback. Meanwhile, we've seen a flattening of the yield curve, which suggests the bond and stock markets may be sending conflicting economic signals.

This morning's release of the May New Home Sales from the Census Bureau came in at 610K, up 2.9% month-over-month from a revised 593K in April. Seasonally adjusted estimates for back to February were also revised. The Investing.com forecast was for 597K.

Although the British economy is showing signs of slowing down, the country has not contracted or imploded as many Brexit opponents had predicted. In fact, certain British sectors such as exports and manufacturing continue to expand.

Today's release of the publicly available data from ECRI puts its Weekly Leading Index (WLI) at 143.7, down 0.3 from the previous week. Year-over-year the four-week moving average of the indicator is now at 5.36%, down from 5.45% the previous week and its lowest since August 2016. The WLI Growth indicator is now at 3.4, down from the previous week.

In late May, OPEC (Organization of the Petroleum Exporting Countries) and non-OPEC oil producers agreed to extend production cuts through April 2018 in the face of oil inventories that remain well above average. While one would have expected a positive market reaction, many investors believed deeper cuts were necessary and the market has sold off sharply since the meeting.

RecessionAlert has launched an alternative to ECRI's Weekly Leading Index Growth indicator (WLIg). The Weekly Leading Economic Index (WLEI) uses fifty different time series from these categories: Corporate Bond Composite, Treasury Bond Composite, Stock Market Composite, Labor Market Composite, Credit Market Composite. The latest index reading came in at 25.3, up from the previous week.