In our last video, we talked about the first correction we had experienced in over two years. In this video we will discuss the increased Volatility and how it compares to previous years.
Video: Stock Market Volatility 2018
Click Here to watch on YouTube
Stock prices fluctuate. Volatility measures how much prices change from one day to the next. The majority of the trading days over the past fifty years moved less than 1%. Sometimes prices change in more extreme ways. Price moves of between 1 and 2% happen with some regularity. Bigger moves happen too, but those occur less frequently.
Today a 1% move in the Dow Jones Industrial average is approximately 250 points.
Volatility has increased in 2018. Last year there were only 10 total days when stock prices moved more than 1 %. That has changed in 2018. How does this compare to the historical averages?
But how does 2018 compare to other years? The volatility we have seen so far would rank 2018 the 12th most volatile year of the last half century. One third of the days this year have experienced a price change of 1% or more. Compare that to 2008. In 2008, more than half of the trading days experienced a price change of over 1%.