Wall of Worry
The wall of worry is one of the least understood and most powerful financial behaviors of a bull market. The phrase refers to the fact that the stock market will always have a large number of worries at ALL times. When I say ALL, I mean ALL the time. One thing our financial planning office has learned very well over the last twenty years is that the stock market will always be forced to climb a wall of worry. The stock market has a funny way of perpetually increasing in the face of constant negativity.
Understanding the Wall of Worry
The wall of worry can consist of multiple concerns or a singular issue that may be, say, economic or political. More often than not, the wall of worry is caused by multiple concerns. The ability to climb the wall of worry depends on investor confidence regarding the issues being resolved. In addition, the stage of an economic cycle determines market direction.
Wall of Worry Examples
- 2009: Dow 7,000 – the news was dominated by auto bailouts, economic recession, and nothing but pure negativity.
- 2010: Dow 10,000 – double-dip recession fears! European debt crisis!
- 2011: Dow 11,000 – Greek bailouts! Euro banking crisis, S&P downgrades U.S. debt
- 2012: Dow 12,000-13,000 – Fiscal cliff
- 2013: Dow 13,000-16,000 – Country of Cyprus takes 47.5% haircuts on bank deposits
- 2014: Dow 16,000-18,000 – Ebola virus breakout, Russian annexation of Crimea
- 2015: Dow 18,000-16,000 – Major stock market selloff in China (over 45% decline in 3 months)
- 2016: Dow 17,000-19,000 (almost 20K post-election) – Surprise upset by Trump (conventional thinking at the time was the stock market would fall – instead straight up)
- 2017: Dow 19,000-24,000 (almost 25K) – U.S. tax cuts, Trump investigations
- 2018: Dow 24,000-26,000 – U.S./China trade war, tariffs
- 2019: Dow 23,000-27,000 (as of the end of Q3) – Recession fears, inverted yield curve, U.S./China trade war carries on
Climbing the Wall of Worry
As you can see visually, the Wall of Worry is real, but don’t fret! We will keep climbing that wall all the way to the top! Use our investment tools to alleviate some of your worry. Sign up today!