I have been discussing this over the past few weeks, so I was delighted to see Floyd Norris put it into great context:

“Rarely has a stock market been so wild and moved so little.

Over the last three months, there has been day after day of wild swings in prices. Stocks soar when it appears that Europe will manage to work out a rescue plan for Greece. They plunge when it appears the world may be entering a double-dip recession.

But the Standard & Poor’s 500-stock index has moved almost nowhere. An investor who spent the last three months in private contemplation, without any information about what was going on, could have emerged this week and concluded, from the stock market, that it had been a quiet time for all.’

What’s ironic (if that’s the right word) is that Norris is discussing short term trading. However, it is just as true for long term investing. What we have seen over the past decade is rising volatility and little in the way of forward progress. This is the nature of secular bear markets. (I have a great chart somewhere I’ll dig up for tomorrow).

Here’s the visuals he used in the Times:


click for larger graphic


Volatile, but Nearly Running in Place
NYT, November 4, 2011  

Category: Investing, Markets, Technical Analysis

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

9 Responses to “Lots of Volatility, Little in way of Gains”

  1. Molesworth says:

    Looking forward to the chart.
    Thank you for doing what you do and your passion for truth and accountability. You’ve caused quite a ruckus below.
    BTW, why haven’t you let Invictus out of his cell recently? I especially miss his Fred data dumps.

  2. Lyle says:

    The gains have been in dividends received not in capital gains. Perhaps we are going back to the old model where dividends are the main return on investment.

  3. RW says:

    A causally suggestive way to represent this lack of gains is to chart the S&P vs the inverse of jobless claims the way Joe Weisenthal does at this Money Game post.

  4. JimRino says:

    Aren’t Computers Great!

  5. carleric says:

    I think it just underscores the trading between quants, HFTs and wannabe TA small retail players. I have been virtually uninvolved and plan on that continuing that for the foreseeable future.

  6. number2son says:

    And here we go down the rollercoaster again to start the week. Futures down > 100. Wheeee …..

    … sigh

  7. [...] mentioned yesterday I had a long term chart of secular bear markets that was informative; the above chart (via Merrill [...]

  8. dsawy says:

    What is most interesting is the seemingly “permanent” elevation of volatility starting in about ’95. Just visually putting a moving average through the data, it appears that something happened to the structure of the markets in the late 90′s which resulted in a sustained increase in the “floor” of volatility as represented by those charts.

  9. [...] market participants, egged on by the MSM, would rather be first than right and that’s why we’ve had 3 months of wildly swinging markets in which we actually just finished right back wh…. [...]