Volatility? What Volatility?
There's no doubt the stock market has felt more choppy recently, but has it been more volatile than usual? That's a great question. On and off over the past two years, I've complained to Austin (in the way financial writers do together occasionally) about the "boring market" we've had. Don't get me wrong, I'll take boring anytime over exciting in the wrong direction! But it's felt like the market has essentially done nothing for the past two years. And indeed, the numbers bear that out: At one point last month, the S&P 500 was within 1% of where it stood in January 2004. Twenty-two months, and a total move of 1%. That's dull. Thankfully, Upgrading has kept on extracting solid gains despite the broad market's doldrums, but you can see why the overall market action has seemed pretty dull.
According to a recent article by Mark Hulbert, the market's recent volatility is anything but unusual. His study indicates that the volatility we experienced in October is exactly normal relative to the past 45 years of market history. But market action over the Aug-Oct period was 22% less volatile than normal. So what was essentially normal market volatility in October felt like a wild ride due to us getting conditioned to the lower volatility prior to that.
This is a valuable reminder that investing in stocks is usually a bumpier ride than we've grown accustomed to of late, and it carries some important implications. One is that if you've been feeling antsy based on recent market gyrations, that could be a signal your stock allocation is too high. If nothing else, it may be a sign that your expectations need adjusting, since the recent level of volatility is more the rule than the exception. Of course, you could also try implementing some SMI wisdom and quit paying such close attention to the daily wiggles of the market and your portfolio (see Go Ahead, Be a Quitter). Keeping up once a month is more than adequate for most people, and it helps make the ride to your long-term financial destination feel a little less bumpy. 
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