An­other mile­stone: Most bor­ing mar­ket in decades

Austin American-Statesman - - BUSINESS - By Stan Choe

This year’s run to a NEW YORK — record for the stock mar­ket has been one of the calmest in decades. Just don’t get too com­fort­able.

Only twice this year have in­vestors had to deal with a 1 per­cent drop for the Stan­dard & Poor’s 500 in­dex in a day. That’s far fewer than typ­i­cal.

The last time stocks sailed through such an un­event­ful first seven months was when a group of bur­glars was ar­rested for break­ing into the Water­gate com­plex in 1972.

Broaden the scope to in­clude when the S&P 500 fell or rose by 1 per­cent in a day, and this could be the least volatile year for stocks since 1964, if the cur­rent pace holds.

But as cen­tral banks start to wean mar­kets off the stim­u­lus they’ve in­jected into the global econ­omy, many money manag-

ers say they’re pre­par­ing for a bumpier ride ahead.

For now, mar­kets have been so calm that the big­gest loss for the S&P 500 last week was just 0.2 per­cent. Com­pare that to the whiplash in­vestors felt dur­ing the sum­mer of 2011, when the S&P 500 swung by more than 4 per­cent each day dur­ing one four-day stretch.

In­vestors for­tu­nate enough to be in the mar­ket have en­joyed all the up­side of own­ing stocks with al­most none of the tra­di­tional down­side. Stocks are sup­posed to be volatile, and in­vestors have long ac­cepted that hav­ing to stom­ach big swings in price is one of the costs of own­ing them. But the largest stock fund by as­sets, Van­guard’s To­tal Stock Mar­ket In­dex fund, has al­ready re­turned 11.2 per­cent in 2017 with only a few big down days.

“At the sur­face, it is sur­pris­ing” how calm stocks have been, says Greg Davis, Van­guard’s chief in­vest­ment of­fi­cer. “But it’s not sur­pris­ing if you think about a world where cen­tral banks have been un­be­liev­ably ac­com­moda­tive.”

RICHARD DREW / AP

Spe­cial­ist An­thony Matesic works on the floor of the New York Stock Ex­change in April. On a broad scope, this could be the least volatile year for stocks since 1964 if the cur­rent pace holds.

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