Many investors think that the extreme swings in the stock markets are unprecedented. It only feels that way. A recent article in SmartMoney charted the extreme market moves made by the Dow Jones Industrial Average for every year going back to 1929. Periods of volatility similar to the one we are experiencing now were seen in the 2008-09, 2001-03, 1987 and 1973-74 bear markets. In fact, the chart suggests that it is the period of unusual calm such as the one we experienced between 2004-06 that is unusual.
The experience of investors in 1932 can help put the current volatility in perspective. The Dow experienced more than 120 days of intra-day swings of 5 percent or more. So far this year, we’ve had less than 20 days of swings of that magnitude. But 2008 was a pretty bad year with slightly less than 80 days experiencing 5 percent swings.
Source: How to Tame the Volatile Stock Market, SmartMoney.com.