Newspaper article Charleston Gazette Mail

MARKETS ; Big Drops for Stocks Are Back Again

Newspaper article Charleston Gazette Mail

MARKETS ; Big Drops for Stocks Are Back Again

Article excerpt

NEW YORK - Yes, this is scary.

Stock prices plunged again Friday and are down more than 8 percent in just two weeks, an unprecedented slide for a start of a year. The vicious drops feel even more unsettling because they're such a departure from the placid and strong returns that investors had been enjoying for years. Like vacationers returning from a warm beach to a slushy commute to work, the shock of change is making something already painful even more so.

Now investors just need to get used to it, analysts say.

"It was easy for many years, says Bill Barker, portfolio manager at Motley Fool Asset Management, whose three mutual funds control about $600 million. "That was not an accurate display of what happens in the market all the time.

The painful return of big price swings serves as a reminder that investing in stocks can be harrowing, especially if investors focus on the day-to-day moves.

That's not to say investors can't still win over the long term. Over the past 12 months, an investor in an S&P 500 index fund has lost nearly 5 percent, including dividends. But over five years, they are up a total of 60 percent, and over 10 years, they are up 79 percent.

It's just that analysts expect the volatility to continue. The remarkably calm stretch from late 2011 through last summer was an anomaly.

From 2012 until last summer, investors basked in a market where the Standard & Poor's 500 rarely had a bad day. The widely followed index fell more than 1 percent less often than Los Angeles has rainy days, about 8 percent of the time. During that span, the S&P 500 also completely avoided a "correction, which is what traders call a sustained drop of 10 percent.

It wasn't until this past August when the S&P 500 snapped into its first correction in nearly four years, felled by concerns about China's slowdown and the fragility of the global economy. …

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