In the economic and investment world it is very easy to dispense with reality, especially when the real news is depressing. Bearish news is bad for prices, so good news may be created as an antidote.

Some conservative investors now wonder if they're seeing such a scenario acted out in the marketplace. It began in late January and is unfolding like a soap opera, each episode setting the stage for still another.The economy was doing poorly at the time, but the war was going well. This latter event, said the stock analysts, was very good for consumer confidence, and everyone knows a confident consumer is a powerful force.

There is almost no need to document this power. The consumer sector makes up two-thirds of U.S. gross national product, more than the combined power of government and military, an enormous force.

Stock analysts try to look ahead, and with the war going so well it was a pleasure. The end of the war, they concluded, would give a whopping boost to consumer confidence and that, of course, was good for stocks.

Some analysts, a lot of them, went further. Noting that the onset of recession coincided with the Iraqi invasion of Kuwait, they concluded that an end to the war should be accompanied by an ascent out of recession.

Now the surveys of consumer confidence are coming in and, as expected, they show that consumers are bursting with confidence. Why shouldn't they be when the "experts" have such a glowing outlook?

Investors in stocks could not ignore this show of consumer confidence. They bought. Why shouldn't we buy, they reasoned; the consumer is bubbling with confidence.

The higher prices attracted attention, so much that it converted many disbelievers. These former doubters didn't want to be left out, so they, too, bought. The market rose, and the so-called "wealth effect" became great.

The wealth effect is a psychological factor based on people's feelings that they are richer than before and likely to get even richer.

It makes them willing to take financial risks, such as buying a stock that has risen three times in a year in hopes it will rise even more.

The stock market has a fair record of anticipating economic change But some folks demand a more substantial rationale to explain a stronger economy and higher stock market.

Hopes might be rising, they observe, but worker incomes aren't, and neither are corporate profits.

What is rising is a set of decidedly negative economic measurements, including layoffs, plant closings, dividend cuts, downgradings of corporate and municipal debt, late payments and government budget deficits.

Nobody knows what the next twist will be. Nobody can say for sure if the market is responding to the voice of reason or just listening to its own echo.

It's like in the soap operas, when the writers themselves don't know what the next episode will be.