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Heller: Putting Market Volatility into Perspective

But even that period pales in comparison to what happened during the fourth quarter of 2008. I am so fascinated by this period, that I've memorized the statistics. Of the 64 trading days during the quarter, the S&P 500 closed plus or minus 1% 50 days, or 78% of the time. Remarkably, there were 16 days that the index had daily moves of 5% or more. Between Nov. 19 and Nov. 24, there were four consecutive days that the index moved at least 6%.

To fully put the fourth quarter of 2008 into perspective, consider that between 1950 and 2007, a 57 year period, the S&P 500 experienced a total of 19 occurrences of daily moves in excess of 5%; we experienced 16 during a single quarter.

But the unprecedented volatility did not end there. During the first half of 2009, the S&P 500 had another 72 days that it rose or fell at least 1%. If you include the fourth quarter of 2008, of the 188 trading days over three quarters, there were 122 days of plus or minus 1% moves, or nearly 2 of every 3 days.

^SPX Chart^SPX data by YCharts

Now, back to the present. In June, the S&P 500 has moved plus or minus 1% on six occasions in 14 trading days, and is down about 4% since Wednesday. That's child's play, so far anyway. I don't pretend to know what's coming next. There are many who believe "this time it's' different" because the Fed is signaling that it will be cutting off the funny money in the near future, and that the markets will suffer further. We'll see. The market has a mind of its own, and the shores are littered with well thought out market prognostications which didn't come true. That's one reason I don't try to predict the near-term direction of the market.

I am buckling up, however, for the ride, whatever it might be, and keeping a little powder in case Mr. Market provides a bargain or two.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.

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