Clearly, long periods of low volatility are not unusual. Whatever else may have been occurring in the 1960’s – and despite a war and an assassinated president – there wasn’t much turmoil in U.S. blue chips. Extended periods of both high and low volatility have been a part of the market since it was invented.
Moreover, viewed in this longer perspective, the past decade appears thoroughly ordinary. A bit less volatile than average recently, a bit more volatile than average during the 2000s. But, in the grand scheme of things, it is business as usual.
The phrase “it’s different this time”, uttered by a financial professional, typically provides grounds for mockery. Sometimes it’s true. But if you don’t take the long view, it’s hard to see whether this time is actually different at all.
This article was written by Tim Edwards, director, index investment strategy, S&P Dow Jones Indices.
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