Tag Archives: economy

Are we climbing the “Wall of Worry”?

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slope of hope - wall of worry

Dear Mr. Market:

First and foremost, what is the proverbial “wall of worry”? If bad news is bad…why is it that good news (or even mildly good news) … is also perceived as being ‘bad’?

 

 

Granted, this is not always the case but it certainly is now. What is the “wall of worry”?

DEFINITION of ‘Wall Of Worry’

“The financial markets’ periodic tendency to surmount a host of negative factors and keep ascending. Wall of worry is generally used in connection with the stock markets, referring to their resilience when running into a temporary stumbling block, rather than a permanent impediment to a market advance.”

Two weeks ago we were in Chicago for discussions with analysts, economists, and elite portfolio managers. What’s interesting is that the majority of the investing public is living in fear and at their utmost pessimistic levels of recent history, yet the underlying economics and pure fundamentals of the stock market actually counter such negative and extreme doom & gloom sentiment.

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Top 3 Economic Sectors to Invest in Now

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Dear Mr. Market:

It’s clear that nobody has a crystal ball but there are a few simple tools and “rules of the road” which can help manage your unpredictable and volatile behavior. For those of us who are visual learners this simple graphic is quite helpful in knowing where you may want to allocate your stock positions relative to where we are in the economic cycle.

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There are two curves laid over each other on this graph. Simply explained, the red curve shows you where the stock market is and the green curve shows you what stage we’re at in the current economic/business cycle. Aside from some possible ability to optimally allocate stocks within the most opportune sectors in the economy, the real impact this visual shows you is that the stock market is essentially a leading indicator. In general, the stock market is a forward-looking gauge of what investor expectations are of the economy and interest rates. Continue reading →