Anyone who invests in the stock market knows share prices can go up — and down. That's why they call it a market.
Still, this year, price movements have been fast and furious — shocking investors and prompting many to fear "volatility."
The Chicago Board of Options Exchange tracks the speed of price movements using its Volatility Index (VIX). The new year has sent the VIX soaring, in contrast to last year's unusually smooth performance.
"People talk about the VIX as the 'Worry Index,' " said Jonathan Lewis, chief investment officer at Samson Capital Advisors. "Volatility rises when people get surprised" and decide they suddenly must change their investment decisions, he said.
"Volatility is the market's way of expressing concern that the data and policy pronouncements aren't coming in the way everyone had been expecting," Lewis said.