WARREN Buffett once asked: would you rather have a smooth 12 per cent or a lumpy 15% return? Most would prefer the higher number, even if the experience is less straightforward.

While markets have largely been positive so far in 2019, for many investors the previous 12 months will go down as a period where there were a lot of lumps, with little positive to show at the end of it. Volatility returned and few investors saw double-digit returns at all – let alone 15%.

In 2018, the FTSE 100 was down by around 11%, erasing more or less all gains made since the turn of the millennium. Yet, in May 2018 the index hit a new record and there was talk of it reaching 8,000 points.

It was a jarring experience for some. In the wake of 2008’s credit crunch, there wasn’t a huge amount of volatility – most assets increased in value as markets went on long bull runs. You could stay invested and, whatever was happening in the world, you didn’t need to pay too much attention.

Even Brexit, initially, didn’t have much of an impact. While there was an initial shock to the FTSE 100 immediately after the June 2016 referendum, it had regained all lost ground by the start of July and broke the 7,000-point barrier in early October 2016.

In recent months, by stark contrast, political uncertainty has become a real issue for markets. But it’s only one of a myriad of factors that put a brake on stock indexes from October till the end of 2018. Fears over international trade wars, over-hyped tech giants, the health of emerging markets, and a potential downturn in the US sent many share prices tumbling.

Could it happen again and is it a fair reflection of how these companies are performing? In some cases, perhaps, but in others, no. Investors running for the door isn’t always a criticism of an individual business.

What it does invariably mean is that the share price is going to continue to fall, at least in the short term. Ultimately, share prices are governed by supply and demand. When investors become fearful, it accelerates their desire to ditch an asset and then the price follows suit.

That process creates uncertainty, which – as the old cliché goes – investors and businesses loathe. What’s less-often repeated is the other side of that coin: sometimes opportunity follows uncertainty.

Uncertainty also leads to price discovery: if everything was certain, no one would ever sell. A diving share price reflects the fact that there are reasons to be worried. Sometimes those fears are specific to a stock, but often they’re about wider external issues. If they fall into the latter category and you are patient, a lot of the time they disappear.

It’s easy to get caught up with macro issues. Is the US heading for recession? What is going to happen with Brexit? What are the latest talks between the US and China going to yield? But take a step back. If the company has manageable debt, good profits, a strong brand and a savvy management team then some short-term weakness in the share price because of exogenous factors might be the very entry point you’ve been waiting for.

Take housebuilders. The sector has been hit hard by the uncertainty surrounding Brexit, but have the rules of the game changed? There is still a housing shortage. People will likely still come to the UK to make it their home. Many companies are still delivering strong profits.

That doesn’t necessarily mean everyone should go out and buy shares in housebuilders. But it does present an interesting opportunity for anyone who believes in them. The same could be said of other sectors and could see other areas of opportunity emerge in the next few months.

There is risk associated with any investment, but a level of uncertainty is desirable. As Warren Buffett put it some years ago, you should become greedy when others are fearful and fearful when others are greedy.

Arlene Ewing is an investment manager at Brewin Dolphin Glasgow.