For much of the current economic expansion the stock market has had limited volatility. When it has appeared, it has been short-lived. The chart above displays the S&P 500 index along with the VIX Index, which acts as a proxy for market volatility. In the last ten years, stocks have steadily moved higher, while the VIX has had very few spikes. Volatility has come back with a vengeance in the last several weeks and does not look like it is going away in the immediate term. Investors must remember that short-term volatility is necessary in order to achieve long-term gains.
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