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Volatility and risk are not the same thing

Tong Kooi Ong
Tong Kooi Ong8/28/2017 08:00 AM GMT+08  • 4 min read
Volatility and risk are not the same thing
(Aug 28): The recent spurt in volatility in equity markets should give investors pause.
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(Aug 28): The recent spurt in volatility in equity markets should give investors pause.

The extended period of calm that we have seen cannot be taken for granted and is certainly not a reflection of what could happen in the future.

Smaller-cap stocks were the hardest hit in the latest selloff (though they have also rebounded very quickly). I suspect this will always be the case in the future. Smaller-cap stocks typically have lower liquidity, which, in turn, tends to translate into higher short-term price volatility.

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