Lurches in stock prices in recent months and resulting media attention has understandably can caused uneasiness among investors. The reason is that price fluctuations in the first quarter of the new millennium were the most volatile since 1938.
Volatility is a normal part of investing.
And while large drops in market values can certainly inspire a case of jitters, they can also signal opportunity. Asset classes that exhibit lower levels of short-term volatility than stocks also have provided more anemic historic returns. If you want to achieve higher returns, you generally must accept greater volatility. But where timing has failed, time has succeeded. Long-term government bonds, on the other hand, while posting a positive return in 59 of the 60 periods, failed to match inflation in 22.