The Hindu Business Line : A volatile market should be left to professionals

MINUS 235 plus 225, leaves you with 10, but what does the jagged line depicting intra-day movement of the Sensex signal? Just one thing: volatility. So much so, the hour's news feed that scrolls past reads, "Sensex remains volatile, down by 22 pts in morning trading... Bulls claw back in volatile market... Indices slip slightly after volatile session... Markets volatile... "

Volatility is very much on the prowl beyond Dalal Street too — as in Reuters reporting, "IMF warns about volatile Latin America inflation"; Radio Polonia of Poland speaking of "Volatile electorate"; Seven.com.au of Australia noting, "New Zealand polls remain volatile"; iAfrica.com of South Africa informing, "Police monitoring volatile St Helena"; and MSN Money opining, "Baidu rollercoaster ride highlights volatile sector."

Refusing to come to terms with a feverishly twitching market, the BJP has stated that the zoom is `artificial' and has asked the Government to take necessary measures to prevent a `scam in the offing'.

That the stock exchange too is finding it difficult to reconcile with the hot ascent is evident from NSE's ad, cited on www.forbes.com:

"Any advice or tip that claims that there are huge returns expected, especially for acting quickly, may be risky and may lead to losing some, most, or all of your money."

To get a handle on volatility, run your finger down the pages of Concise Oxford English Dictionary, to find the word sandwiched between volar, `relating to the palm of the hand or the sole of the foot' on the one side, and vol-au-vent, `a small round case of puff pastry filled with a savoury mixture' and volcanic on the other.

Volatile means "easily evaporated at normal temperature", and when that happens to your gains, a mini-tragedy is at hand.

What is volatile is "likely to change suddenly and unexpectedly or suddenly become violent or angry," explains (http://dictionary.cambridge.org). Examples that it provides are, "Food and fuel prices are very volatile in a war situation. The situation was made more volatile by the fact that people had been drinking a lot of alcohol. He had a rather volatile temper and can't have been easy to live with."

"Tending or threatening to break out into open violence; explosive: a volatile political situation. Changeable; mercurial; flighty: a volatile disposition... Fleeting; transient: volatile beauty," are among the definitions provided for volatile on www.infoplease.com.

"You are as giddy and volatile as ever," is a snatch of Swift. Volatile temperament is `inconstant'; and WordNet 2.1 Vocabulary Helper pulls in the Bard's phrases on this word — `inconstant affections'; `an inconstant lover'; `swear not by...the inconstant moon'.

The word `fickle' may be closer, meaning `liable to sudden unpredictable change' and Shakespeare too would help with "O fortune, fortune! All men call thee fickle," from Romeo and Juliet; and "Giddy Fortune's furious fickle wheel," as in King Henry V.

Tending to vary often or widely, as in price, says The American Heritage Dictionary of the English Language (www.bartleby.com). Other meanings are: "Inconstant; fickle: a flirt's volatile affections.

Light-hearted; flighty: in a volatile mood. Ephemeral; fleeting. Tending to violence; explosive: a volatile situation with troops and rioters eager for a confrontation.

Flying or capable of flying; volant." About etymology, the dictionary states that the word is "From Old French, from Latin voltilis, flying."

A more elaborate account of the roots is in Online Etymology Dictionary. It traces the word to 1597, Latin volare `to fly'. "Sense of `readily changing, fickle' is first recorded 1647.

Volatiles in M.E. meant `birds, butterflies, and other winged creatures' (c.1300)."

Volare is in volley too. "1573, `discharge of a number of guns at once,' from M.Fr. volee `flight' (12c.), from V.L. *volta, fem. noun from Latin volatum, pp. of volare `to fly.'

Sporting sense (originally in tennis) is from 1819 (v.), 1862 (n.), from notion of hitting the ball in flight. Volleyball is attested from 1896," explains www.etymonline.com.

Flying is the first meaning in Webster's 1828 Dictionary. "Flying; passing through the air on wings, or by the buoyant force of the atmosphere. Having the power to fly; as birds are volatile animals." As noun, the word once meant, "A winged animal".

Then comes the evaporation, explained as the ability of wasting away, or of easily passing into the aeriform state. "Thus substances which affect the smell with pungent or fragrant odours, as musk, hartshorn and essential oils, are called volatile substances, because they waste away on exposure to the atmosphere."

The dictionary explains volatility using the example of alcohol and gold. The former is a volatile liquid because it easily passes into the state of vapour on the application of heat. "On the contrary, gold is a fixed substance, because it does not suffer waste even when exposed to the heat of a furnace; and oils are called fixed, when they do not evaporate on simple exposure to the atmosphere."

However, a share that doesn't undergo any change in its value, or an index that refuses to stir up or down will only be an indication of a directionless market. Oxford Dictionary of Business has an entry for volatile between `vocational training' and `volume'.

"Denoting a market, commodity, share, bond, and so on, that may be expected to fluctuate rapidly and frequently in value," explains the dictionary.

"A volatile investment is not one that should be recommended to `orphans and widows'; a volatile market is one that should be left to professionals." Useful insight.

Volatile is "having a high degree of volatility; i.e. characterised by large price movements; for example, a high-flyer. Opposite of stable," says www.investorwords.com.

Volatile has specific meanings in several fields, one learns from Wikipedia. Thus, "Volatility is a measure of the risk in a financial instrument. In chemistry, a volatile substance vapourises to a gas at a relatively low temperature.

Volatile organic compounds vapourise at normal temperatures and pressures. Volatile anaesthetics are a class of anaesthetics which vapourise easily. Volatile substance abuse is the abuse of household inhalants containing volatile compounds. Volatile oil is another name for `essential oil'.

Volatile acidity is an unacceptably high level of acid or vinegar, in winemaking." As a computing term, volatile is use for memory and variables. "Volatile variables can be changed by external processes. Volatile storage holds items in memory only while power is on."

Public memory of volatile markets is also volatile, we may say, as an indication of the humans' indomitable optimism. Which is why, despite all well-meaning cautions against dabbling in volatile markets, there will be tears and wails when the indices wildly swing to abysmal chasms.

ComingToTerms@TheHindu.co.in

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