Revving up.

The article focuses on international stock market volatility. Price gyrations in American shares have surged back to record levels, after receding somewhat from a record high in the scandal-ridden month of July 2002. In Europe, most equity indices, which seem often to amplify any swings in America, have fallen by around 9% and in Germany by 11%. The volatility of prices has also risen to new peaks. Meanwhile, share-price volatility in emerging markets was a mere 19% in July and has now fallen back to 15%. This strange inversion of volatility may be testing some popular investor notions, notably that higher risk is re- warded by higher returns. While volatility has increased sharply, share returns in rich countries have only sunk lower.