Yes, the Volatility of 2008 Was Record-Breaking

• ByJonathan Heller, RealMoney Contributor
• On 10:00 am EST, Tuesday January 6, 2009

The sometimes dreaded "V-word," volatility, has been invoked frequently during the past year and has perhaps even made its way into common vocabulary, the way "subprime" did last year. And if you've happened to dive deeply into index return data, as I have, it's no wonder. In this case, my references to volatility pertain not to the VIX index but rather to the unbelievable equity index price swings we've lived through during the past year.

For instance, during the 252 trading days in 2008, the S&P 500 index ended more than half of those days, 134, or 53% to be exact, plus or minus 1%. Seventy-five of those days had losses greater than 1%, and 59 had gains greater than 1%. Never in the history of the S&P 500 have we experienced such extreme moves so often.

The fourth quarter alone accounted for an amazing 50 such days, out of 64 total trading days. Essentially, four out of every five days during the fourth quarter, 29 to the negative side and 21 to the plus side, the S&P had at least a 1% move. What was once unthinkable became reality in 2008 and led us all on the roller-coaster ride of our investment lives.

In hindsight, a 1% move now seems somewhat meaningless, perhaps boring, but that's what we became accustomed or conditioned to during the past year. I, for one, won't have an issue if and when market action becomes "boring" once again.

But 1% moves were merely the tip of the iceberg. Of the 134 days with 1% moves, 72 had moves greater than 2%. So nearly 30% of the time during 2008, the S&P moved more than 2%. In this case, 31 of those days were positive and 41 negative.

It gets better (or worse, depending on your perspective). 2008 was also unique in the number of 5%-or-greater moves, with a remarkable 18 such days, seven positive and 11 negative. All but two of those days occurred in the fourth quarter alone! Here's the kicker: From 1950 through 2007, there were just 19 days when the S&P 500 moved 5% or more -- two in the 1950s, one in the 1960s, one in the 1970s, seven in the 1980s, four in the 1990s and four from 2000 through 2007. In a sense, we experienced 57 years of volatility in just three months. I go on record stating that this will not happen again, at least in my lifetime.

Perhaps all of the above is the reason why history will ultimately remember the market action of the past year not as the "Bear Market of '08" or the "Crash of '08" but rather as the "Panic of '08."

Moves of 5% or More in the S&P 500 Date Close % change 12/16/2008 913.18 5.1 12/1/2008 816.21 -8.9 11/24/2008 851.81 6.5 11/21/2008 800.03 6.3 11/20/2008 752.44 -6.7 11/19/2008 806.58 -6.1 11/13/2008 911.29 6.9 11/12/2008 852.3 -5.2 11/6/2008 904.88 -5.0 11/5/2008 952.77 -5.3 10/28/2008 940.51 10.8 10/22/2008 896.78 -6.1 10/15/2008 907.84 -9.0 10/13/2008 1003.35 11.6 10/9/2008 909.92 -7.6 10/7/2008 996.23 -5.7 9/30/2008 1164.74 5.3 9/29/2008 1106.42 -8.8 7/29/2002 898.96 5.4 7/24/2002 843.43 5.7 1/3/2001 1347.56 5.0 4/14/2000 1356.56 -5.8 9/8/1998 1023.46 5.1 8/31/1998 957.28 -6.8 10/28/1997 921.85 5.1 10/27/1997 876.99 -6.9 10/13/1989 333.65 -6.1 1/8/1988 243.4 -6.8 10/26/1987 227.67 -8.3 10/21/1987 258.38 9.1 10/20/1987 236.83 5.3 10/19/1987 224.84 -20.5 10/16/1987 282.7 -5.2 5/27/1970 72.77 5.0 5/28/1962 55.5 -6.7 9/26/1955 42.61 -6.6 6/26/1950 18.11 -5.4

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Know What You Own: In early trading on Tuesday, the biggest percentage gainers included the PowerShares Exchange-Traded Fund, Indevus Pharmaceuticals, Energy Services America, FPB Bancorp, TXCO Resources, Aladdin Knowledge Systems and P&F Industries.

Buzz up!