Much has been made of the market’s recent volatility. Today, 300-, 400-, and even 500-point swings in the Dow feel almost normal.
Many factors have been cited as contributors to the big moves: hedge funds delevering their portfolios, institutional investors selling liquid assets (i.e., stocks) to raise money to fund commitments to less liquid investments, mutual fund redemptions, and so on. No doubt, they’ve all played a role—and with no apparent end in sight.
I would add another factor at work: The market is trying to reprice the economic system in the United States.