Every recent stock market decline has been a rallying cry to buy.
"Even when we saw the disruption in markets for Brexit and the election, the market was able to wash these events out of the matrix very quickly," said Dan Deming, managing director at KKM Financial. "Market participants are getting more and more conditioned to fade those moves."
The "buy the dip" trade is also one big reason market volatility is so low. Market pros aren't paying up to protect their flank as much as they have in the past.
The cost of "insurance" has gotten cheaper, as investors hedge against big moves with options in the S&P 500. This is reflected in a low VIX — the market's so-called fear gauge — which is calculated based on those options. Right now, the VIX, or the CBOE Volatility Index, is flashing very low expectations for big swings in the S&P 500. In fact, its price, just under 10, implies a daily move of just two-thirds of a percent in either direction over the next 30 days.
Low volatility is showing up across financial markets — in stocks, bonds and currencies — though stocks have the lowest volatility of all, according to Ben Bowler, head of global equity derivatives research at Bank of America Merrill Lynch.
That will only change when herd behavior to "buy the dip" changes.
"The one thing that will really break us out of this funk is a shock in which the market initially buys the dip, and then you have a secondary shock that causes people to question whether this is the time when that trade breaks," Bowler said. "That will hit the reset button in terms of volatility."
Bowler said while the VIX only goes back to 1990, the realized volatility of the S&P would have been lower than it is now only 3 percent of the time going back to 1928. "It's very unusual statistically speaking. We've been setting records for volatility for quite some time," he said.
Some strategists say the low-volatility era can only end with a bang. Even Goldman Sachs CEO Lloyd Blankfein said it's a worry. He said the low-volatility markets may be reflecting a "bubble of confidence" and are not in a "normal resting state."
There are any number of back burner events that could trigger a jump in volatility, including an escalation of tensions with North Korea, or other geopolitical event. The potential for a slowdown in China is being watched carefully now, and there's political risk both in Europe and in the U.S, should Congress fail to adopt tax reform.