Skip to main content

Scott Olson/Getty Images

It's no secret that indexes haven't been moving that much so far this year. Sure, the S&P 500 is closing in on a four-year high after gaining 12.3 per cent in 2012. But the steps to get there – in terms of daily moves – have been tiny: The biggest gain has been 1.8 per cent and the biggest loss has been 1.6 per cent.

According to Bloomberg News (via Crossing Wall Street) the average daily move is just 0.46 per cent, down from 1.04 per cent in 2011. Last year was extraordinary in terms of daily volatility. But it turns out that this year's moves are not a return to normal; they're overshooting, with volatility at its lowest level since 1995.

That might make some investors a touch nervous, with low volatility reflecting a market that is tapped out after more-than doubling over the past three years. However, if you like historical precedents, you might see something encouraging here: 1995 marked the start of an extraordinary five-year winning streak for the S&P 500. The index rose for five straight years by an average of 26 per cent each year. At the end of 1999, the S&P 500 had more than tripled.

Story continues below advertisement

Of course, these gains coincided with the bubble in technology stocks, which is unlikely to be repeated. As well, cautious investors continue to point to another potential point of concern in the market: According to Bloomberg, stock trading on the New York Stock Exchange has fallen to its lowest rate in 13 years.

Report an error
About the Author
Investing Reporter

David Berman has been writing about business and investing since 1995. He has written for a number of magazines, including Canadian Business and MoneySense. He worked at the Financial Post as an investing writer and daily columnist before moving to the Globe and Mail in 2008. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.