Bull and Bear

Volatility... Is There More of it Today?

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Bull and Bear

If you follow the stock market, you cannot get away from the word volatility.  It is discussed in the media, over the Internet, the front page of the newspaper’s Business section.  All you have to do is Google “today’s volatility” and you will find thousands and thousands of references. 

With all the talk and hype about today’s volatility, it makes it seem different than the past.  That perhaps “it is different this time.”  As an investor, you may be prone to think, “Maybe now is not a good time to invest.”

Is the market more volatile today? Are investors taking more risk today than they would have 20 years ago because of higher volatility?  We decided to look at markets around the world and compare the standard deviation (volatility) of major asset classes decade-by-decade.

United States

When we look at the volatility of large companies and small companies going back to the 1930’s, you can see that recent volatility is very normal, if not below the long-term average.

International Markets & Global Real Estate

We have quality data on the international and global real estate markets dating back to 1970 and current volatility is the lowest it has been!


Emerging Markets

We have data for the emerging markets back to 1980 and volatility during the 1990’s and 2000’s was much higher than now.

We often look at the past with rose-colored glasses and our memories are prone to remember more of the good times than the bad.  When news stories suggest that the global economy is different and the good times are behind us, it is important to look at the long-term data.

The market has gone through decades of wars, recessions, economic booms, bouts of hyperinflation, civil unrest, and natural disasters…..and they have proven their resilience.  In fact, risk is the source of stock market returns.  If there were no risk, there would be very low returns.

What’s that old saying……the more things change, the more they stay the same.