From Thefreedictionary.com ax·i·om // (ks–m)
- House prices never go down.
- Wars are good for the economy.
- The only reason insiders buy it to make money
I’ve long taken issue with the axiom that goes “stocks recover before the economy.” Bullshit. What they really mean is, “We jack up stock prices in anticipation of a recovery so Joe Sixpack buys at the top.” It’s also called front-running and theoretically, it’s illegal. I am curious to see what’s going to happen when Wall St. figures out that Joe Sixpack isn’t going to be the greater fool for once. But I digress.
The axiom on the cutting block today is Markets climb the wall of worry and descend the slope of hope. I know this one sounds particularly inane, even for Wall Street, but what if its true? You’d just have to figure out which side of the hill you’re on, right? At this time I’d like to present the CNBC poll from March 31:
One of the great mysteries of our time is where did all the money that propelled stocks more than 70% in the last 13 months come from. I have no idea. It didn’t come from China or mutual funds. There was quite a bit of leveraged money in stocks at the end of February ($234B), but that doesn’t explain this kind of run-up either.
If stocks continue higher given the cheery sentiment of CNBC’s audience, we should probably throw this axiom on the burn pile, too.