Stock markets climbing wall-of-worry

How about this for a model of stock market behaviour; after a long boom share prices start to fall as the news flow deteriorates.

At first investors are not too worried but then the news flow deteriorates alarmingly to the point where the ultimate nightmare, a prolonged deflationary depression, seems a real possibility. Share prices collapse.

Now we have an interesting position where share prices are discounting almost the worst outcome imaginable.

Still scope for improvement
Even if what happens is bad, as long as it is an improvement on a long-drawn-out deflationary depression, there is scope for share prices to rally.

The rally itself becomes a positive factor, for example by making it easier for debt-burdened companies to raise fresh equity capital at more reasonable prices.

Slowly but surely investors begin to believe that the bear market is over and that the next bull market has begun....