How to Cope With Market Volatility

In August, the volatility index VIX spiked to 28.3, its highest level since 2011. With volatility here to stay, Morningstar contributor John Waggoner explains how to brave the bumps

External Writer 20 October, 2015 | 8:00AM
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If you start to whimper just a little bit before you read the market news, it's probably because stocks are more volatile now than they have been since 2011, when oil prices soared, U.S. debt got downgraded.

Volatility, of course, is really a euphemism for "scary down days, often in succession". No one complains about a market with wild and crazy gains. But heightened volatility can not only wrack your nerves, it can make you do silly things with your money.

It's no wonder the market feels so volatile. It is. Let's start by looking at the magnitude of recent market volatility. One measure is the CBOE's VIX index, sometimes called the "fear index." The index measures the expected movement of the S&P 500 in the next 30 days. It's a weighted blend of the price changes on options in the S&P 500.

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The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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