Was 2011 Volatile?
Here's an interesting ranking of stock market volatility by year since 1928. It turns out 2011 is "only" 17th, so I guess we all shouldn't complain about volatility, right?
Well, a few observations:
First, other markets were more volatile, e.g., bonds and precious metals. Lesson: stop focusing so much on the stock market as your exclusive window into financial and economic reality. The stock market can certainly tell us - within limits - what lies ahead, let's say, 6 - 18 months down the road. That's probably the best way to "listen" to what the stock market says.
Second, notice how 2008 and 2009 were right below the years of the Great Depression. That's the more important statistic here.
Third, to put things in perspective, there have been 83 years since 1928. 2011 ranks 17th. That puts it far above the median. In fact, it's slightly below the top 20%. So it was pretty volatile on a relative basis.
Fourth, and most important I think, is to remember that we've entered and era that some have called an era of "inhuman" volatility. If you haven't seen this, or thought about it, do that now. It will prove to be most helpful as we enter 2012. In fact, I would guess it will prove most helpful for the foreseeable future.
Stay focused on the reality that sits under all the statistics. And with that, here's wishing you a
Well, a few observations:
First, other markets were more volatile, e.g., bonds and precious metals. Lesson: stop focusing so much on the stock market as your exclusive window into financial and economic reality. The stock market can certainly tell us - within limits - what lies ahead, let's say, 6 - 18 months down the road. That's probably the best way to "listen" to what the stock market says.
Second, notice how 2008 and 2009 were right below the years of the Great Depression. That's the more important statistic here.
Third, to put things in perspective, there have been 83 years since 1928. 2011 ranks 17th. That puts it far above the median. In fact, it's slightly below the top 20%. So it was pretty volatile on a relative basis.
Fourth, and most important I think, is to remember that we've entered and era that some have called an era of "inhuman" volatility. If you haven't seen this, or thought about it, do that now. It will prove to be most helpful as we enter 2012. In fact, I would guess it will prove most helpful for the foreseeable future.
Stay focused on the reality that sits under all the statistics. And with that, here's wishing you a
Happy New Year!
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