Markets, You So Crazy!


Average % Daily Change (click to enlarge)

Another day, another 4% swing in the markets.  If you follow these sorts of things (and you probably do thanks to the news media’s infatuation with these numbers) you might think stocks have been abnormally volatile over the past year.  You would be right.  The chart above traces the average daily change in each of the three major indices for every year since their inception.  Besides the extremely volatile period for the Nasdaq after the dot-com bubble, we have not seen such dramatic daily price movement since the 1930s. 

While it causes the typical American to fret over his or her 401k (aka ‘301k’ for recent retirees), there is at least one group that is almost certainly reveling in these historic conditions:  day traders.  Expect them to be the next target of investigation and legislation once Wall Street bankers have been sufficiently castigated.

February 11, 2009 12:02 am

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