Market volatility hasn't increased, research shows

SEP 26, 2010
Talk about the stock market's being more volatile than ever is unfounded, according to a white paper from The Mutual Fund Store. The data showing how the markets performed over the past 30 years tell a very different story, said Adam Bold, founder and chief investment officer of The Mutual Fund Store, a registered investment adviser with $5.3 billion in assets under management. “The reason that people are shellshocked is that they are getting bad messages,” he said. “This was the summer of fear.” Whether it was the political turmoil in Washington, the Tea Party or the British Petroleum oil spill, investors have had a lot to worry about, and that has undercut their belief in the stability of the markets, Mr. Bold said. But the numbers paint another picture. The market closed down 48% of the trading days between 1970 and 1989. From 1990 to 2008, the market closed down 47% of all trading days. For this year through August, the market closed down 46% of all days. In fact, the chances that the market will have consecutive down days seem to have fallen over the years. Between 1970 and 1989, there was a 25% occurrence of two consecutive down days of trading. Between 1990 and 2009, this happened 21% of the time. Through last month, there have been 32 days this year when the market closed down for the second day in the row. At that pace, the year will end with a 19% occurrence of second-consecutive-day drops. The occurrence of one-day de-clines of more than 1% has in-creased, however. Between 1970 and 1989, there were 35 days with more than a 1% drop. Between 1990 and 2009, there were 36 such days. This year, through August, there have been 32 such days, according to the research. On the other hand, one-day gains are also more frequent. One-day gains of more than 1% on average have occurred 38 days a year since 1970; while this year through August, they have already occurred on 27 days. “For the past decade, the stock market has closed up more than 2% on average 14 days a year and closed down more than 2% only six days a year,” Mr. Bold and Stacey Schreft, director of investment strategy at The Mutual Fund Store, wrote in the paper. E-mail Jessica Toonkel at [email protected].

Latest News

Modera, Simplicity announce new acquisitions in busy day for industry M&A
Modera, Simplicity announce new acquisitions in busy day for industry M&A

Two RIAs expand their geographic footprints with deals in New York's Capital Region and coastal Alabama.

Advisor moves: Ameriprise, Prospera, Raymond James land teams with $920M in assets
Advisor moves: Ameriprise, Prospera, Raymond James land teams with $920M in assets

A 27-year Merrill veteran, Florida advisors, and a trio of New Jersey advisors just moved to new platforms.

LPL Research launches 17 model portfolios, hitting $100B in AUM
LPL Research launches 17 model portfolios, hitting $100B in AUM

Broker-dealer expands its model portfolio platform with modular building block strategies designed to give advisors greater customization at scale.

Wealth Enhancement adds $592M Chicago-area RIA
Wealth Enhancement adds $592M Chicago-area RIA

The mega-RIA with roughly $160 billion in client assets remains firmly in acquisition mode amid rumors of private equity giants vying to scoop it up.

Annuity sales hit a record as war and Fed jitters redraw fixed income
Annuity sales hit a record as war and Fed jitters redraw fixed income

Record annuity demand for principal protection collides with the most hawkish Fed dissent since 2016.

SPONSORED Direct indexing webinar targets tax-loss harvesting amid market swings

Northern Trust’s Ken Lassner shows advisors how to convert volatility into after-tax portfolio gains

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income