Volatility in Stock Market

Volatility in Stock Market

Fluctuation is the key story of stock market. It may be shocking and worrying for you when you find that morning newspaper discloses that market is2% down this morning? If you are, then maybe the best thing is that you stop looking at what the stock market does on an regular basis basis. We've left the great mitigation behind, and stock-market volatility with regular swings of 2% or 3% in a day is going to be here for the predictable future.

Maybe you're not worried about the stock market itself, but rather with the terms you often go through : an index measuring service-industry executives' business activity dropped to 44.6 in January from 54.4 in December. But here's the thing: an index called the NMI, which the stock market is (supposedly) reacting to. Yes, the NMI was at 44.6 in January, but there's no NMI figure for December. The 54.4 figure was in the business activity index, which fell to 41.9 in January, but that's a narrower and more volatile measure.

So yes, this is a pessimist survey. I expect there will be many more such pessimist surveys released in the next few months. The thing to remember is that it's not the bearishness which is jolting the markets, it's the fact that the survey came in below market expectations. But those expectations can hardly have been very finely calibrated, given that they were expectations for an index which has never before been published. In other words, it's probably fair to treat today's stock-market fall - like nearly all one-day moves in the stock market - as noise rather than signal. Last week the market went up, this week the market is down. It's normal.So next time when you are investing money be very careful and go through various trends and updates to finalize your investment.