If the market climbs to ridiculous heights without any significant pullbacks, it’s inevitable that some people become skeptical. In our current environment, the bears are starting to increase and yet, I wouldn’t call worrying about losing money a “wall of worry” - a phrase that is being exploited and misused.

The wall is supposed to be “a bullish market trend occuring in the face of negative uncertainties.” We have a bullish market trend, but I don’t see a lot of negative uncertainties on investor radar screens. I saw them last summer as the market rebounded, but those factors have disappeared. I guess you could suggest there are negative uncertainties about whether oil will increase to levels that no one seemed to care about before. Maybe an increase in interest rates is an uncertainty or whether rates will be lowered sooner than later by the FOMC. Someone might be concerned about a terrorist attack or an increase in geopolitical tensions. But all these things and almost anything else I can come up with are not overly negative right now and not measurably present. In fact, those issues are just ordinary aspects of the world we live in.

The wall typically occurs at the beginning stage of a rally when quite a lot of investors are pessimistic (and simultaneously sold out). That was also the case last summer but it’s not the case now. If you believe that the last 4 years is “the beginning stage” of a rally, I would view you as one hell of an optimistic and long term investor. I don’t know when this rally is going to end, but I know it’s not just starting now.

While doing my research for this post, I decided to look for references to the wall during the bullish trend. I know it’s unfair to hold the media accountable for overworking a story, but you can go backwards and read about how worried investors have been about one topic or the other for months and years on end. I find that funny because I used to imagine a wall being built over time, then climbed, then like Humpty Dumpty we fall off and get hurt. I guess I was wrong about that. This wall seems to have been around forever.

Ordinarily, walls are built by skeptics who are gradually converted to believers as the market increases despite their pessimism. Each round of new believers fuels more gains and some skeptics are left behind. This repetitive process is the “climbing.” However, this is not what is happening now. Our current market is full of believers and this talk about the wall is being perpetuated to keep the momentum going. The focus now is much more about keeping believers believing and trying to prevent them from being skeptics, but that is not part of the real process of building walls.

The biggest farce of all this “wall” talk is the crowd that is hyping it the loudest. It’s coming from the bulls. These men and women put a smirk on their face and point to one bearish sentiment indicator or another and proclaim that the wall is in tact. SHUT UP!! Bulls should stick to their rosey scenarios and leave the pessimism to people like me that actually believe it. You’ll notice that it’s tough to find too many bears who are pushing their case. Sure - you have a core group that love to be negative but they are ALWAYS negative. So the next time you hear someone commenting about the wall, consider the source. Mentioning the wall in blatant tones and then suggesting that because of those statements, it’s time to buy is a bullish tactic.

If you are a believer in my rant, you are a skeptic!  If you are a skeptic of my comments, you are a believer!  Regardless of which one you choose, you should be worried about losing money whether there is a wall or not.