Some of you may have heard some noise in the media over the past week about the small dip in ...
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Putting Recent Volatility in Perspective
November 21, 2008
The first of the two charts above shows that the recent level of volatility in the stock market has been very uncommon. The second chart shows the average daily move in the S&P 500 since 1993 has been 0.77%. In the month of October, the average daily move was 3.71%.
That means in intraday trading, the market is valuing companies at an incredible variance. Historically, it doesn't last very long, and it does point toward market bottoms.
Are we close to a bottom? Yes.
Can it go lower? Always.
Unfortunately my crystal ball broke the first time I tried using it. What I do know is that stocks are cheap now. Don't sell, and if possible, buy! But I think I can say with confidence that five years from now today's prices will have been a dream to buy.
