fxtrader07

Why Stock Market Volatility Is Perfectly Natural

feix, this is not volatility. this is selling on a grand scale. mass-liquidation. and it has little to do with fundamentals anymore.. the same with corporate bonds, btw. lots of people want to or are forced to exit their positions - at almost any price.
thisa is going to stay here for at least 2 more months imho. yes, fears and uncertainties about economy play a role, too. but only a secondary one.
people simply search for reasons - 'there must be some fundamental reason for the low stock/bond prices'. Yes and no. there isn'tnot for THESE low prices of many (not all) stocks and bonds. except if you expect a complete collapse of the world economy. but then again - the prices of all stocks and bonds are still way too high.
so, markets try to price the probabilty of survival and of armageddon. the human brain cannot think in terms of probabilities. it cannot handle a 70% chance or a 80% or 90%. so you have these wild swings and you have all this liquidation going on.
where will it sto?
i have no clue. it may right here. or 20% lower, or 60% lower. wtf do i know? wzhat i do know though, is that economic armageddon has perhaps a 5% probability. so with 95% probability, most bonds and many stocks will be much much higher a year from now