Is The Increase In Volatility Signaling A Dangerous Market Environment?

Introduction

Over the last several weeks stock price volatility has increased significantly above norms.  All of a sudden it is not uncommon to see stock prices moving 5%, 10% or more in a single trading day.  Interestingly, this volatility is occurring both to the upside and the downside.  Common sense would suggest that the intrinsic value of a business cannot change by those orders of magnitude from one day to the next.  Logic dictates that the market is either inaccurately pricing the stocks now or it was incorrectly pricing them yesterday. […]

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