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While volatility is often compared to the iconic carnival ride, there are some important differences. Here’s what you need to know.
WHEN STOCK PRICES MOVE UP sharply one day and zoom down the next, it can feel like you’re on a roller coaster. But beyond the short-term ups and downs, the markets are quite different. For example, roller coasters leave you off at the same place you began, whereas equity markets, over time, have historically moved higher, as Nick Giorgi with our Chief Investment Office explains in our video.
The chart below of the S&P 500 illustrates this long-term upward trend. And while short-term price drops can be deeply unsettling, having an investment plan in place that takes into account your comfort level with risk can help you through the market’s more volatile periods.
Past performance does not guarantee future results.
Despite periods of sometimes intense short-term volatility, the long-term historical trend for U.S. equities is up. The S&P 500—a key benchmark for U.S. stocks—has averaged returns of 8.19% a year since 1957.
View "Volatility in Pictures" for more on the market’s ups, downs and rebounds.