Is the Stock Market More Volatile Now Than Ever Before?
Daily swings of 200 or 300 points can leave investors feeling more than a little unnerved, but a deeper dive into the numbers over the years may reveal a truth that could help calm those jitters down a bit.


Since I began working in the financial services industry in 1987, I’ve noticed that investors seem to continually feel that the current stock market has been more volatile than it was in the previous five or 10 years. This thinking was brought to my attention once again recently when a client indicated that they felt like the stock market today was more volatile than it has been in the past. I agreed that it sure feels that way. But is it really?
I decided to do some research, and I was a little surprised at what I found.
Today it’s not uncommon to have the Dow Jones Industrial Average, a measure of large U.S. company stocks, swing up or down 100 points in a day. In fact, it’s not uncommon to have moves of 200-300 points in a single day. That sounds volatile, right? However, when we dig deeper we find there is more to the story.

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
In the chart below I looked at each decade starting in the 1930s and outlined the number of days that the stock market rose or fell more than 1%. What you notice is that since 2010 the number of such days is actually lower than during the previous four decades (1970-2009). So far this decade 11% of the days have been up more than 1% and 9% of the days have been down more than 1%.
I also looked at days when the index rose or fell 2% or more. The results below show that stock market volatility since 2010 has been quite similar to past decades.
If current stock market volatility is similar to that of the past, why does it feel so much more volatile? The reason is actually quite simple. The index is much larger now, so a 1% move up or down represents a far greater number of points. As you can see in the chart below, on the first trading day of 1980 the Dow closed at 825. One percent of 825 is 8.25 points. Since then the stock market has climbed. By June 15, 2018, the index was up to 25,090. One percent of 25,090 is 250.9 points. So, if the stock market, as measured by the Dow, is now at 25,090 and falls 250.9 points, that is the same as an 8.25-point drop in 1980.
Investors hardly notice days when the Dow drops 8 points now, so naturally when it drops 250 points they feel like volatility has gone sky high by comparison. As you can see, in order to measure volatility, we need to look at the percentage increases and decreases as opposed to the point increases and decreases to get an accurate impression.
Volatility since 2010, as measured by a daily drop or gain of more or less than 1%, has actually been lower than it has been compared to many past decades. Consequently, there is no reason for alarm.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Ray LeVitre is an independent fee-only Certified Financial Adviser with over 20 years of financial services experience. In addition he is the founder of Net Worth Advisory Group and the author of "20 Retirement Decisions You Need to Make Right Now."
-
The Retirement 'Rule of $1 More'
The 'Rule of $1 More' explains how to plan for critical retirement thresholds. Because "you don't want to step off a cliff just because of $1 more."
-
Recent Market Volatility Offers Valuable Lessons for Investors
Stocks will always rise and fall, but strategic investors can benefit through dollar-cost averaging, rebalancing in down markets and taking the long view.
-
Retiring Early? This Strategy Cuts Your Income Tax to Zero
When retiring early, married couples can use this little-known (and legitimate) strategy to take a six-figure income every year — tax-free.
-
Ditch the Golf Shoes: Your Retirement Needs a Side Gig
A side gig in retirement can help combat boredom, loneliness and the threat of inflation eroding your savings. And the earlier you start planning, the better.
-
Roth IRA Conversions in the Summer? Why Now May Be the Sweet Spot
Converting now would enable you to spread a possible tax hit over more than one payment while reducing future taxes.
-
A Financial Expert's Three Steps to Becoming Debt-Free (Even in This Economy)
If debt has you spiraling, now is the time to take a few common-sense steps to help knock it down and get it under control.
-
I'm an Insurance Expert: This Is How Your Insurance Protects You While You're on Vacation
Here are three key things to consider about your insurance (auto, property and health) when traveling within the U.S., including coverage for rental cars, personal belongings and medical emergencies.
-
Investing Professionals Agree: Discipline Beats Drama Right Now
Big portfolio adjustments can do more harm than good. Financial experts suggest making thoughtful, strategic moves that fit your long-term goals.
-
'Doing Something' Because of Volatility Can Hurt You: Portfolio Manager Recommends Doing This Instead
Yes, it's hard, but if you tune out the siren song of high-flying sectors, resist acting on impulse and focus on your goals, you and your portfolio could be much better off.
-
Social Security's First Beneficiary Lived to Be 100: Will You?
Ida May Fuller, Social Security's first beneficiary, retired in 1939 and died in 1975. Today, we should all be planning for a retirement that's as long as Ida's.