Posted by on Apr 17, 2016 in Articles & Advice, Blog, Featured, Posts |

Image credit: “Loop the Loop, Luna Park, Coney Island,” photograph, ca. 1903, Library of Congress

By Jason Zweig  |  Apr. 14, 2016 2:14 pm ET

The latest newsletter from Matarin Capital Management, a Stamford, Conn.-based firm that runs about $700 million in assets, offers a simple visual reminder that investors often perceive the stock market to be more volatile than it is.

Viewed daily over the 12 months that ended March 31, the S&P 500′s moves look superficially like the EKG of someone having a heart attack. Viewed quarterly, they resemble a shruggie emoticon without the smirk. And seen over the full sweep of the last 12 months, the market’s moves look like a whole lot of nothing happening in slow motion.

As Stuart Kaye and his partners at Matarin write, “Because volatility spikes are shorter-term phenomena, they heighten investor awareness and attention on a short-term basis. In behavioral finance, the overconfidence bias tell us three key things: that information overload leads to overconfidence, that overconfidence leads to overtrading and that overtrading leads to underperformance.”

Despite all the talk about elevated volatility, the stock market isn’t much more volatile these days than its historical average. It just feels that way — especially if you watch it constantly.