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Was 2018 Really That Volatile?

Stock market volatility returned with a vengeance in 2018. There were 15 days when the S&P 500® Index lost more than 2%—compared with zero in 2017. On the upside, stocks posted their biggest one-day gain in almost a decade on December 26.

While last year’s troughs and peaks may seem extreme, was 2018 really that volatile? “Not terribly,” says Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research. In fact, if you rank the past 20 years from most volatile to least, 2018 falls smack in the middle—and 2017 is dead last (see “20 years of volatility—ranked,” below).


20 years of volatility—ranked

While 2018 may have seemed volatile, it likely suffered from its proximity to the historic calm of 2017.

Source: Schwab Center for Financial Research. Rankings are based on the S&P 500 Index’s historical volatility each year over the past 20 years. Historical volatility is calculated by measuring the index’s annualized average deviation from the index’s average level during each of the years shown.


That said, “whether the market is more or less volatile than average is irrelevant for most investors,” says Mark Riepe, head of the Schwab Center for Financial Research. “Instead, you should be considering market conditions through the lens of your goals and reacting—or not—accordingly.”

If you have a large stake in the stock market and need to tap those assets soon, for example, increased volatility is a reminder that your portfolio should perhaps be adopting a more conservative stance. If, on the other hand, you’re in it for the long haul and retirement is still many years away, you should generally turn a deaf ear to market noise and stick to your long-term plan.

What You Can Do Next

  • Subscribe to Schwab’s Choiceology® and Financial Decoder podcasts to learn more about how behavioral biases can skew your judgement.—and what you can do about it.
  • Unsure if your portfolio is in line with your goals and risk tolerance? Call 800-355-2162 to speak with a Schwab investment professional.
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Important Disclosures:

Standard deviation is a statistical measure that calculates the degree to which returns have fluctuated over a given time period. A higher standard deviation indicates a higher level of variability in returns.

The Schwab Center for Financial Research is a division of Charles Schwab & Co., Inc.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.


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