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Aaron Brown

Dispelling a Myth About Stock Market Volatility

The biggest problem is the premise that the higher prices go, the more stable they are.
Buckle in.

Buckle in.

Photographer: David Ryder/Bloomberg

During the recent spate of concern that stock market volatility was too low, I heard an old myth. For example, former Treasury Secretary Larry Summers explained that the phenomenon was a natural consequence of stock market gains:

The following rebuttal is not intended to pick on ivory tower economics or Summers, but rather to expose important misunderstandings that fool even some practicing investors.