The big story this quarter has been volatility…but what is it? Investopedia defines volatility as “A statistical measure of the dispersion of returns for a given security or market index. Commonly, the higher the volatility, the riskier the security.” Essentially, how much is the price moving? Bigger swings, to the upside or downside, increase the volatility for a security or index.

The VIX (the Chicago Board Options Exchange Volatility Index) measures implied volatility of S&P 500 index options, which is different from historical volatility defined above. It concentrates on the price volatility of the option markets, not the volatility of the index itself. The VIX is quoted in percentage points and translates, for the most part, to the expected movement in the S&P 500 over the upcoming 30-day period. It is presented as an annualized standard deviation. As we mentioned in Computerized Investing back in 2010, “One way to look at the VIX is as a measure of what investors are willing to pay to hedge their equity portfolios using S&P 500 index options. As put options have become a popular method of hedging portfolios, a rise in the VIX is seen as a signal that investors are becoming increasingly worried about downside volatility in the market.” The VIX doesn’t forecast highs or lows, it simply measures the volatility of the underlying securities. The higher the VIX, the more volatility there is, and vice versa.

It is important to understand the measures used to track market volatility, especially in fluctuating market times like these. If you don’t understand what analysts and economists are taking about when they are referencing the VIX, then how are you supposed to interpret it properly?

Yes, the market is volatile right now, but volatility can ultimately be useful on the upside and the downside, not just one or the other. For the long-term investor, day-to-day market fluctuations shouldn’t guide your judgment. Many investors look at market pullbacks as opportunities to buy quality investments at a discount.

This month, we look at websites that are useful for dividend reinvestment plan (DRIP) investors in our latest On the Internet column. While there are undoubtedly topics with more abundant resources, we did find a couple that will help investors looking for information on DRIPs.

In our newest Interviews column, we hear from MarketWatch columnist Chuck Jaffe about his investing life. Some questions were holdovers from last month, but not all. If you are interested in reading his proposed question for the next interviewee (it’s a good one!), check out my interview with him.

In this month’s edition of Best of the Web, we highlight four sites that offer the best portfolio and tracking optimization services. While these are the sites we deem to be on the top of the heap, any “best of” list is somewhat subjective. We are interested in hearing your feedback about the sites you use for these different categories.

I’ve gotten some great suggestions for articles, so keep the emails coming! Thank you to all who have reached out; I really appreciate it. I have also been asking Computerized Investing members to propose articles they might contribute, so if that’s something you’re interested in, feel free to email us at CI@aaii.com with your ideas.

Next month, we will be launching a brand new column on robo-advisors. It’s been a topic that I’ve seen enormous amounts of interest in, particularly since my article in the AAII Journal “What Exactly Do Online Advisory Services Offer?”

I’ll save the details for next month and leave everyone in suspense (for now).

Have you used a robo-adviser? If so, let us know. You may be the next CI Guest Author.

Since our next edition of CI won’t be available until November, I hope everyone has an excellent Halloween!