by Tom Bradley

“Only in the false tale told by nostalgia is there such a thing as a calm stock market. It’s never existed. And it never will exist.”

This is the conclusion of a Motley Fool article on market volatility. The piece debunks the commonly-held belief that markets are more volatile today than in the past. It acknowledges that hour-to-hour volatility is higher, but demonstrates using charts (showing daily, weekly, monthly and yearly volatility by decade) that today’s market moves are nothing special.

When it comes to market volatility, there are a few things investors should remember:

  • When markets are going through a particularly volatile period, forecasters will confidently predict that it will continue. When markets are experiencing relative calm, there won’t be any predictions about volatility.
  • Ignore the predictions (or lack thereof) – market volatility is impossible to predict. It can appear in a heartbeat and disappear with a whimper.
  • Stock price gyrations are part of investing. It goes with the territory. To expect otherwise would be unrealistic.
  • Volatility is one of the things that makes long-term investing hard (i.e. sticking to the plan), but ...
  • It’s a wonderful source of returns for investors who can take advantage of it.

The Fool piece finishes with a good reminder.

“The good news is that where today’s market really is more volatile – hour to hour, day to day – is the kind of period long-term investors shouldn’t pay much attention to anyways. For the periods we care about – year to year, decade to decade – it’s same as it ever was.”