The Merriam-Webster dictionary has the following definition of volatility, “a tendency to change quickly and unpredictably”. The stock market has plenty of it. Stock prices go up and down on a daily basis while nothing may have changed in the underlying business. Volatility invokes emotions and investors often act on these emotions.
Nothing like price to change sentiment
-Helen Meisler
Many academics and some investors see volatility as risk. They postulate that a stock that is declining is riskier than a stock that is rising in price. In a badly chosen and low-quality stock, it is a risk. But, volatility in a high-quality company in the stewardship of a long-term oriented management team can be a gift!
Amazon is perhaps the most interesting case study. Everyone today wishes they bought and held Amazon stock since its inception. But it was very very difficult! A $10,000 investment in 1997 would be worth close to $22,580,645 today - 38% CAGR over 24 years. Here is the beautiful chart:

However, there were periods of time where one had to endure extreme volatility. In 2000:

Yes, you are reading it right. The stock fell from $105 per share to $6 per share - a 94.3% drawdown in 24 months. It was the same company with the same products with the same management. In 2008:

Between 2013-2021:
