What is ‘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.
Explaining ‘Wall Of Worry’
While a “wall of worry” may sometimes consist of a single economic, political or geopolitical issue significant enough to affect consumer and investor sentiment, it more commonly comprises concerns on numerous fronts. The markets’ ability to climb a wall of worry reflects investor confidence that these issues will be resolved at some point. However, market direction once the wall of worry has been surmounted is impossible to ascertain, and depends on the stage of the economic cycle at which it occurs.
For example, the markets’ ability to climb the wall of worry is most clearly discernible at the end of major bear trends, which means that the markets may continue to advance once the wall has been surmounted. However, a continued advance is much less certain if the wall of worry forms near a major market peak, in which case a subsequent decline is more likely.
Further Reading
- Occupy Wall Street and the economic imagination – journal.culanth.org [PDF]
- Economic consequences of financial reporting and disclosure regulation: A review and suggestions for future research – papers.ssrn.com [PDF]
- Walking down wall street with a tablet: A survey of stock market predictions using the web – onlinelibrary.wiley.com [PDF]
- Chasing the Greased Pig Down Wall Street: A Gatekeeper's Guide to the Psychology, Culture, and Ethics of Financial Risk Taking – heinonline.org [PDF]
