No, you are not imagining it — stock and bond market volatility has steadily increased over the past 2 decades as innovative financial products have been developed and implemented. This is contrary to the objectives of many new-fangled financial products, and it is certainly contrary to what banking system regulators believed was the case (is still the case).

Most of the time (and over intermediate to long periods of time), stock and bond portfolios perform in a manner that is somewhat predictable and rational. Most of the time. It is the performance of the remaining small percentage of the time that can destroy years of gains. During these times, investments that are ordinarily uncorrelated, become perfectly correlated and drop like an elevator in unison. The fundamental driving force behind these periods of panic is a dearth of buyers.

There are 2 solutions to this risk. The first is to recognize that periods of panic will occur and that unless you are comfortable losing 30-40% of your investment, you should hold small positions in volatile investments. This may be thought of as strategic or perhaps even passive investing. To compliment this, we use active tactical hedging.

Tactical hedging may be understood as similar to buying insurance. The premium you pay on the policy is the cost to get in and out of the hedging ETF plus the exposure to loss in the small hedge position if the market rises while you own the hedge position. The co-pay is the reduced loss your overall portfolio sees while markets suffer losses that would otherwise be severe to catastrophic. The deductible is the initial loss your portfolio suffers until the hedge is bought. Just like owning insurance, you would have more money if you did not buy it, but knowing you have insurance brings valuable peace of mind by virtue of your portfolio not participating in large market losses that may catastrophically change your net worth.