Investors are optimistic about equities. They have no alternative

explain about the theatre business,” says Philip Henslowe, the owner of the Rose theatre in “Shakespeare in Love”, a romantic comedy from 1998. “The natural condition is one of insurmountable obstacles on the road to imminent disaster.” “So what do we do?” asks his companion. “Nothing,” Henslowe replies, “strangely enough, it all turns out well.” “How?” “I don’t know. It’s a mystery.”For a similar worldview, look at your average equity investor. America’s stockmarket has spent a decade and more climbing a wall of worry. It has shrugged off the aftermath of a financial crisis, geopolitical tensions and a pandemic that shut down industries. After slumping earlier this year, of late it has been on a tear, war and inflation notwithstanding. Like Henslowe, investors seem preternaturally keen to believe that, despite everything, it will be all right on the night. Again like Henslowe, who must sell a threatreful of tickets to appease the debt collectors at the door, that may be because they have no choice. Stocks look risky. But the frantic sell-off in the first half of this year showed how little safety the alternatives offer.