Volatility Is Back

Stocks will likely see greater ups and downs than in recent years. And last week's turmoil could well presage a long-awaited shift away from riskier stocks and toward stocks of large companies.

The real mystery about the 416-point plunge in the Dow Jones industrial average last Tuesday isn’t that it happened, but that it didn’t happen a long time ago. Unfortunately, last week's fall didn't last just one day. For the week, the Standard & Poor’s 500-stock index fell 4.4% while the Nasdaq Composite lost 5.9%.

Before last Tuesday’s 3.5% fall, the S&P 500 had gone 949 trading days -- close to four years -— without as much as a 2% decline. It was the longest period without such a decline since 1950.

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Steven Goldberg
Contributing Columnist, Kiplinger.com
Steve has been writing for Kiplinger's for more than 25 years. As an associate editor and then senior associate editor, he covered mutual funds for Kiplinger's Personal Finance magazine from 1994-2006. He also authored a book, But Which Mutual Funds? In 2006 he joined with Jerry Tweddell, one of his best sources on investing, to form Tweddell Goldberg Investment Management to manage money for individual investors. Steve continues to write a regular column for Kiplinger.com and enjoys hearing investing questions from readers. You can contact Steve at 301.650.6567 or sgoldberg@kiplinger.com.