The train's engineer is worried that a recession - or at least a slow, uphill grade - could be ahead. There is concern among passengers that the budget deficit could get bigger, taxes might increase to trim the deficit, and corporations could get socked.
By the time this concern makes its way down the logic train to the caboose (where, in this analogy, the investing is done) the conclusion is: Corporate profits could get pitched onto the siding and stocks might not do so well next year.
Whether or not that is valid logic, it might account for the chugging and sputtering of the Dow Jones industrial average of late.
The Dow closed Friday at 1,2xx.xx, d/up xx.xx points for the week. Except for a big stallout last January and a quick lurch in August, that's about where the Dow has been for the past 18 months.
That recession-ahead theory is bolstered by economic signals coming out of Washington.
Last week the Commerce Department reported that retail sales fell 0.1 percent in October. Automakers reported a 4.7 percent drop in early November sales (although the General Motors strike could have played a part). Industrial production was unchanged in October, and factory shipments fell.
Now, none of those reports are ominous in themselves, and a roller-coaster market might well wish for more of the poking along the Dow is doing at present. But it's been this way so long that some analysts are beginning to wish for a little more zip.
''Investors thrive on long or short follow-through,'' observes Robert Wibbelsman, a market-watcher for the Kayne, Anderson & Co. securities firm in Los Angeles. But this is a market without ''greed or fear,'' he says.
Is that so bad? It is, Mr. Wibbelsman says, if you think about the long-term attractiveness of stocks. Savvy investors can make money in an up or a down market, but at present such investors are faced with ''the agony of the narrow trading range.''
He characterizes the chief fear on Wall Street as the above mentioned: slowing economy, rising deficit, possible new taxes, a possible crimp in accelerated depreciation allowances and tax incentives.
Wibbelsman says small investors are leery of new investments. They were drawn to the market in 1982 and '83, but with the decline in the over-the-counter market and of secondary stocks beginning in mid-'83, they suffered losses. Meanwhile, he says, institutional investors ''are tired of selling or buying under stress and being wrong all the time.''
Research chief Robert Walsh of Houston's Rotan Mosle brokerage says that 18 months at the 1,200 level has ''worn investors to a frazzle'' and caused a chronic lack of direction. But he is not so sure that is going to last.
''Under it all, the underpinnings are very strong,'' Mr. Walsh says. ''The investor has been sidetracked by the rhetoric of the election.''
For Mr. Walsh, there are three underlying factors that are essential to investment decisions, and they are all positive: The economy is growing, he says , and ''should for the rest of the decade'' at a ''slow, healthy rate.'' Inflation is under control. Interest rates are coming down.
''We are not at the end of the (economic expansion) cycle,'' Mr. Walsh contends.
''At the end, heavy-industry stocks will come into vogue, but at present consumer-related issues are still best.''
The market could ''test'' the 1,300 mark in the next one to three months, he says. It could also slip to the 1,150-to-1,175 range before moving toward 1,300, but the current ''risk/reward ratio is leaning very heavily toward reward.''
''The market is wrestling with a recession possibility in 1985,'' observes William Fletcher, senior portfolio manager at Independence Investment Associates , a money-management subsidiary of the John Hancock Insurance Company in Boston. ''But our view is that it won't occur. We expect growth to resume. We think the pause in the stock market will come to an end. It will be a good economy, and corporate profits will grow.''
Mr. Fletcher says Independence's $1.6 billion portfolio has been invested heavily in utility stocks and large, moderate-growth issues since the first of the year. Now, he says, better relative values can be found in smaller-growth areas, including such groups as technology and electronics stocks.
There are two distinct investment strategies seen by these advisers: defensive and offensive.
Mr. Fletcher's view is to stay ''fully invested in equities.'' He expects ''little drama between now and the end of the year'' and says ''buying through the balance of the year is attractive.''
With a desultory Dow, Mr. Wibbelsman recommends that both individual and institutional investors should consider selling their weakest investments to build liquidity and strengthen their portfolios.
But a more optimistic Mr. Walsh contends that investors should not be ''impatient'' and should continue to look for stocks in consumer-related fields.
Interest rates Percent Prime rate 11.75 Discount rate 9.00 Federal funds 9.56 3-mo. Treasury bills 8.86 6-mo. Treasury bills 9.33 7-yr. Treasury notes 11.58 30-yr. Treasury bonds 11.64 Source: Bank of Boston