How Volatile (Dangerous) Is Today’s Stock Market?

Based on conversations with clients, I’d suggest that most investors view the market of the new millennium as more volatile and fragile than it’s been in the past. New concerns that could affect a portfolio are seemingly always coming to light – think of the near-financial collapse of the U.S. economy during the last recession, the U.S. debt downgrade, the potential bailout crises in Europe and the possible devaluation of the euro, domestic unemployment concerns, and the perennial concern about the inflation/deflation of the dollar. Add to this the idea that the world has become a more unstable place and the reality that supercomputers make thousands of trades every second. To determine the validity of these perceptions, Allan Roth analyzed the performance of the Wilshire 5000 (an index of the market value of all stocks actively traded in the United States) since 1980 in the May edition of Financial Planning Magazine.