After a long period of almost unprecedented calm, volatility has returned to the stock market in grand fashion. The reaction on the part of most investors is, at best, unease, and, at worst, downright panic. It’s human nature: for most investors, the pain of stocks going down is more tangible than the joy of when they go up. The common impulse is to do something – anything – to minimise the pain.


While I take no pleasure in others’ misfortunes, we’ve historically made most of our profits from other investors behaving in a panicked and irrational fashion and selling us certain stocks at prices far below their intrinsic value. More volatility equals cheaper stocks, which equals higher returns.