17. Volatility Villains
The investors who fled the market following the Flash Crash were responding to the perception of increased intraday volatility. Since 2008, the daily market roller-coaster ride had become wilder and more unpredictable than any in memory. Moves in the stock averages that once took the better part of a year were occurring in a matter of hours. The Dow Jones Industrial Average (DJIA) might climb 50 to 100 points before noon and give it all back by 4 p.m. A company’s shares could spike up or down independent of a specific news event or any change in the company’s underlying fundamentals. In the 20 years prior to the Great Recession, the equities market had been far less turbulent. Now it appeared as wild and risky as the commodities ...
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