The past few years can only be described as one of the most unusually serene periods in history for the U.S. equity market. While over time it began to feel normal, we have been living in the outlier. Let’s take a quick trip down memory lane.

The DiMaggio Streak of Markets

We’ll begin with the historic run from November 2012 through October 2014, what I have called the “DiMaggio streak of markets.” At 475 consecutive trading days above the 200-day moving average, we have never seen such a steady advance and lack of a meaningful pullback in the history of the S&P 500.

“Buy the Dip”: The V-Bottom Formation

While the DiMaggio streak ended last October, another historic streak would continue: the V-bottom formation. Since the start of 2013, every minor pullback was followed with a vertical rally to new highs. This positive feedback loop was the most powerful we have ever seen.

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The S&P is the New 6-Month CD

In early 2015, the V-bottom formation would come to an end but another historic streak would remain intact. Word began to spread among investors that the S&P 500 was the new 6-month CD. Indeed, it had been behaving as such, up over the prior six months for an astounding 186 consecutive weeks. Only the mid to late 1990’s had a longer run.

Out with a Bang

This streak would end two weeks ago, marking an important shift in the investing environment. It’s impossible to fully appreciate an outlier when you’re living in it. Only when the outlier ends does it become apparent.

That is where we find ourselves today, and it has ended not with a whimper but with a bang. Last week we saw the Volatility Index (VIX) spike briefly above 50, a level seen only once in the past, in the period from October 2008 through March 2009. With the greatest 5-day gain in the history of the VIX, August 2015 will always be remembered as the example of how quickly a market can move from stability to extreme volatility.

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Back to Reality

For market participants, the end of the outlier in many ways marks a transition back to reality. As I noted on CNBC last week, investing has always been about striking a balance between risk and reward. Over the past few years, there has been only reward as the U.S. equity markets were behaving like risk-less instruments. This is not how investing works; there is no such thing as risk-free reward in stocks.

Going forward, the market environment will inevitably be more challenging than the recent past. As I wrote back in March, if trees don’t grow to the sky, buy and hold returns over the next few years are likely to be well below average. In such an environment, ex-ante risk management will be increasingly important (click here and here for our CFA presentation and paper on Lumber, Gold and risk management).

Those still “swimming naked” and “dancing until the music stops” take note: we’re not living in the outlier anymore.