Jan 3, 2022 • 8M

Volatility the New Normal?

The S&P intraday price movements show more future volatility expected

 
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Volatility the New Normal

Source: Yahoo Finance historical price data. Data as of 12/31/21.
  • Looking at intraday percent moves of +/-1% for the S&P 500, 2020 and 2021 combined have almost more swings than 2016→2019 combined (243 vs. 272).

  • 2020 saw 62% of its number of trading days experiencing this +/-1% intraday price swings compared to 34% for 2021.

  • Access to commission-free trading, more cash during COVID, and leniency of ability to borrow on margin have allowed investors to move in and out of stocks more frequently.

  • Since the beginning of 2020 (2020 and 2021), the average intraday price movement upwards and downwards has been at its 10-year high → +0.70% and -0.63% vs. the next highest set in 2018 of +0.59% and -0.61%.

  • The bottom line, be ready to endure more short-term pain and gain as more price swings will be a part of regular investing.