Increased Volatility

030 - Volatility Index
Unfortunately, most individuals who have assets to invest are hesitant during this market pullback and many individuals who see this market lull as a buying opportunity don’t have funds to invest. This is a common scenario during periods of increased market volatility, and often stretches out the duration of stagnant equity markets.

How volatile is this investment environment? As measured by the S&P 500, the market moved more than 3 percent in either direction during a single day only once between 2004 and 2007. By comparison, the market moved at least 3 percent in one day 40 times in 2008, and most were near the end of the year. Further, moves of 2% to 3% occurred 28 times in 2008.

For those who see no end in sight for this volatile market, remember: we have been here before! Between 2001 and 2003, the market moved between 2% and 3% an average of 20 times per year, and that was over a three year period. We then moved on to enjoy a relatively stable period between 2004 and 2007. Thus, history indicates that the increased volatility we are seeing in the market is not the “new norm” and we should expect volatility to subside at some point, creating a more reasonable investment environment for all.

About the author

Lon Jefferies, CFP®, MBA
Lon Jefferies, CFP®, MBA

Lon Jefferies is an investment advisor representative with Net Worth Advisory Group, a fee-only financial planning firm in Salt Lake City, Utah. He is a Certified Financial Planner (CFP®) and a member of the National Association of Personal Financial Advisors (NAPFA). He possesses an MBA and bachelor's degrees in Finance and Marketing from the University of Utah. Lon writes articles for local magazines such as Utah CEO, Business Connect and Utah Business Magazine, and he consistently contributes articles to online magazines such as FIGuide.com and FILife.com (by The Wall Street Journal). Additionally, Lon is an expert author at EzineArticles.com. Lon has been quoted nationally in publications such as the NY Times and Investment News.

Lon can be contacted at (801) 566-0740 or lon@networthadvice.com. Learn more about Net Worth Advisory Group at http://networthadvice.com and visit Lon's blog at http://www.utahfinancialadvisor.blogspot.com.

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