According to Merriam-Webster, the word “volatility” comes from the Latin, volātilis, meaning flying. Any investor who has remotely been paying attention to market events over the past several weeks can appreciate that etymological derivation.
Even this community grown accustomed to wild swings of value over the past seven years was taken aback by the gyrations on display in the public equity markets, first overseas, then in the US. The Dow plummeted some 2000 points in the one week beginning August 18th, but has recovered almost half of that ground through this week.
What caused these dramatic moves is unclear. Ostensibly the slowdown in growth coming out of China was a contributing factor, despite the fact that this trend had been developing and trumpeted for months.
Or it could have been the general uncertainty on interest rates, despite the fact that the Fed has been telegraphing an increase all year.
Whatever the reason, after the worrisome headlines last month, investors reassessed the situation and determined that things weren’t quite as bad as they looked – at least, in the equity markets.