Editor’s note: “How to Find Success Despite Wild Stock Market Volatility” was previously published in December 2024. It has since been updated to include the most relevant information available.

When it comes to the stock market, it can be a bit like a hurricane at sea: powerful, unpredictable, and capable of turning calm waters into chaos in an instant.

Sure, stocks have been faring well for a while now. The S&P 500 jumped more than 20% in both 2023 and ‘24. It is up here in the early weeks of 2025, too. 

But while the market waters have been quite calm lately, that certainly isn’t always the case.

You see; historically speaking, the stock market averages about one bear market every five or six years. But in the past six years, we’ve had not one… not two… but three different bear markets. 

There was the flash crash of late 2018, which saw stocks briefly fall into a bear market right before the holidays. There was also the COVID crash of 2020, wherein stocks plunged in the fastest market crash in history. And then there was the inflation crash of 2022, when tech stocks were obliterated by sky-high interest rates. 

Three unforeseen bear markets in the past six years – that is wild. 

But, of course, on the other hand, we’ve also seen some huge stock market successes, too.

Navigating Both Flash Crashes & Fast Recoveries

On average, the stock market rises about 10% per year. But in 2024, stocks climbed 23%. They rose around 27% in 2021. And in 2019, stocks rallied about 29%.

In other words, over the past six years, the S&P 500 has achieved three different years with nearly 30% returns. As a matter of fact, of the stock market’s 10 best years since 1950, three have occurred since 2018. 

Three different bear markets and three of the best years ever for stocks – all within the past six years.

So, if the stock market has felt wild to you lately, that’s because it has been. 

But this wildness could be the new norm for Wall Street going forward. 

We can thank technology for that – at least, that’s my opinion. 

Why? Because algorithms run the market now. 

These days, algorithmic trading accounts for approximately 60- to 75% of total trading volume in the U.S. stock market. That means most trades are automatic, executed by bots adhering to pre-set parameters. 

And, unlike humans, robots don’t really ask why. They just do what they are programmed to. 

So, when something bad happens, all the algorithmic-driven systems rush toward an exit. And when something good happens, they race to get involved. That’s why, in my view, algorithmic trading creates crowding. 

As a result, we get wild swings in the market – both up and down. The algorithms drive momentum one way or the other, and the market follows. 

We get flash crashes and fast recoveries; big bear markets and massive bull runs; major meltdowns and momentous melt-ups. 

We get stock market volatility.

The Final Word on Stock Market Volatility

Such unpredictability can be scary. But since that turbulence drives stocks both ways, you can’t really afford to be crippled by fear, sitting on the sidelines. You need to be in the game. 

But to play well, you also need to craft an investment strategy that can handle the volatility – one that can mitigate the downside while also maximizing the upside. 

And we think we’ve created a strategy that could help you do just that. 

That is, we’ve developed a stock screening system – dubbed Auspex – that leverages fundamental, technical, and sentimental data to find the strongest stocks in the market at any given time.

The strategy therein? Use this tool to find the best stocks in a given month. Buy and hold those stocks, then cash out at month’s end. Lather, rinse, repeat.

We’ve been executing this strategy internally, with great success, for the past several months.

Just a few weeks ago, for example, we had Auspex scan the market to find the best stocks to buy for the month of January. And of about 14,000 stocks, it only found two that met all its strict criteria. As of now, both stocks are up about 17%… in less than a month. 

Learn how Auspex can help take the guesswork out of investing, replacing uncertainty and volatility with certainty and stability.

_{On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.}

P.S. You can stay up to speed with Luke’s latest market analysis by reading our Daily Notes! Check out the latest issue on your Innovation Investor or Early Stage Investor subscriber site.