What is a Wall of Worry?
In the finance world, a wall of worry is an increasing amount of negative information about a security or about the.
How Does a Wall of Worry Work?
For example, a wall of worry might be information that the's is flat, followed by reports of higher , followed by increases in rates, followed by at several major companies.
Stockinvestors generally feel pretty downtrodden by this information, especially if it comes at a constant drip over time. Accordingly, investors begin to wonder if stock prices are going to become more volatile or fall.
However, some investors use the wall of worry to buy, and thus in some cases stock prices might actually rise as the negative information mounts. When the tension finally breaks (that is, one good report comes out or the market gets good news somewhere), stock prices might actually drop as the buyers become sellers.
Why Does a Wall of Worry Matter?
There are two emotions in investing: fear and greed. A wall of worry plays on the former, but it can also trigger the latter.
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