Mark McHugh

Wall of No-Worries?

In Open Thread on Monday, April 5, 2010 at 12:09 am

From ax·i·om //  (ksm) 


1. A self-evident or universally recognized truth; a maxim: “It is an economic axiom as old as the hills that goods and services can be paid for only with goods and services” (Albert Jay Nock).
2. An established rule, principle, or law.
3. A self-evident principle or one that is accepted as true without proof as the basis for argument; a postulate.


Everybody loves an axiom, I always say.   Bite-sized bits of wisdom which don’t require any actual thought or analysis, because everyone accepts them as undisputed truth.  All too often they turn out to be nothing more than fool’s gold.


  1. House prices never go down.
  2. Wars are good for the economy.
  3. 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.  

Turd-on-a-stick, anyone? 

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:

Pretty hope-timistic if I do say so myself 

 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.

  1. Yeah, but this axiom uses alliteration and it rhymes.

    Wall of Worry

    Slope of Hope

    Come on, if the glove doesn’t fit…

  2. I kind of think that the majority of Joe Sixpacks will always be fools, or at the least uneducated. The market is such a complex monster that many of them will never really understand what they’re doing with their E*trade accounts. Point, click, lose. On a sidenote, I do like that CNBC now has a disclaimer about their surveys after the one I saw a few months ago that added up to 126%. Definitely not very scientific.

  3. Hey Mark,

    Thought you’d enjoy this. Bill Black. Ben Bernanke. Priceless.

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