From The New Yorker:

Since the beginning of July, there have been six days on which the S. & P. 500 has gone up or down by at least two per cent, and daily moves of more than one per cent—like the ones we saw at the start of last week—have come to seem practically routine. Precipitous falls in the market have frequently been followed immediately by sharp rallies, and vice versa.

S&P500 x volatility

S&P500 x volatility

Mebane Faber, of Cambria Investment Management, recently did a study showing that, historically, volatility is significantly greater in down markets than in up ones.

One likely reason is that traders, like gamblers, often find themselves “chasing losses”—if you’ve lost a lot, it’s tempting to make big bets, in an attempt to get your money back.

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