A
stock on a
stock market always has some measure of
volatility which is a function of how much the stock's
price changes over an hour, day, week, or some other period.
Some stocks are not very volatile at all,
remaining fairly steady in price going up or down despite
famine, pestilence, war, and war
reparations.
Others can be very volatile, rapidly changing in price from one hour to the next, seemingly incoherent.
A stock's volatility can also be considered a vote of confidence in the stock, the company issuing the stock,
and even its managers.
For example, if a company's stock is
beleived to be properly priced,
its volatility will be low
as investors aren't willing to over-value or under-value it
even if the company has recently issued a poor earnings
report, or its CEO has been caught fondling the hired help.
In other cases, a poor earnings report or a potential
lawsuit may affect the stock price significantly.
Such volatility indicates a lack of confidence in the stock
price, and a lack of confidence that the company and/or its
managers can effectively navigate the troubles.
Volatility is often considered a Good Thing for
day traders
and automatic trading systems which rely on the fluctuation
to take advantage of the swings in price.