Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
Remember when a 500 point drop in the Dow was a “big deal”?
I put in some buys around 3 PM & went for a bike ride. What a turn-around in the last hour. Starting to feel like March ‘20. Buy now. Ask questions later.
I wish market commentators would stop using points and use percentages instead. Points aren't that meaningful anymore.
Totally agree but saying "is off 3.5 percent" isn't the same impact as "down over 1100 points!" when spoken by pundits or headline writers in the news industry...A single big number is more emotional, which the press needs to capture attention.
... though it'd get really boring when they say "up/down by 0.45 percent" which would confuse most people since it a) presumes they don't know whether that's a big or small move on the index in question, and/or b) require some mental math to figure out.
What a couple astute observers have noted is that while the Dow Jones average is a numbers based index, its relevance at any given time is better considered in percentages. That’s true. But I myself don’t view that as a problem. I believe the human mind is very adapt of drawing the necessary logical relationships. If I’m driving 70 in a 60 mph zone it’s not hard for me to estimate that I’m going about 15% too fast. Conversely, if a 750 ML bottle of scotch appears 33% full, I can easily surmise that about 250 ml of scotch remains. Point being … we go back and forth in our minds between numerical values and percentages all the time.
In 1970, the Dow Jones’ average closing value was 753 - roughly 2.5% of today’s. And in 1970 I purchased a new full-sized car off the lot for $2800 - about 5% of what a similar vehicle costs today. Now, when looking for new cars today I would no more expect to find one selling for $2800 than would I associate 753 as a meaningful Dow average. In both instances, my mind has already adjusted to the changes in value over time. I believe most normal minds work that way.
Numbers? Percentages? It’s all in the mind. Either one works for me.
I’m annoyed by news media usually citing the Dow regarding stock market movements, rather than much better indices like the S&P or total market.
I also hate (during the good times) when the news will say the index "reached another all-time closing high...." It's become a trite talking point, but I guess it sounds good to viewers to keep 'em dancing in the game.
The OP also gave the day’s losses for the S&P and NASDAQ. Maybe I should have put all 3 in the header.
Wasn’t trying to make any particular point except that losses (ie 500 on the Dow) that might have provoked a post, comment (or mild scream) on the board a few months ago were becoming more commonplace and eliciting little reaction. Agree the Dow isn’t the best barometer. It is, however, widely watched and is usually placed first, above all the other indexes in the financial press.
Whichever index(s) you watch, if you string together multiple daily losses of around 1.5% they can add up in a hurry.
Comments
Points aren't that meaningful anymore.
... though it'd get really boring when they say "up/down by 0.45 percent" which would confuse most people since it a) presumes they don't know whether that's a big or small move on the index in question, and/or b) require some mental math to figure out.
In 1970, the Dow Jones’ average closing value was 753 - roughly 2.5% of today’s. And in 1970 I purchased a new full-sized car off the lot for $2800 - about 5% of what a similar vehicle costs today. Now, when looking for new cars today I would no more expect to find one selling for $2800 than would I associate 753 as a meaningful Dow average. In both instances, my mind has already adjusted to the changes in value over time. I believe most normal minds work that way.
Numbers? Percentages? It’s all in the mind. Either one works for me.
Inflation in the NY metropolitan area has been running lower than the national average. The Y/Y figures in April are 8.3% national, 6.3% NY.
Response: With prices so much higher in NY, that could amount to the same price increase in dollars.
https://data.bls.gov/cgi-bin/surveymost?cu
@rforno- Well, if I was the newsreader I'd say something like "Up/down by a little bit... nothing to worry about".
@msf- Were you by any chance talking to my wife?
Wasn’t trying to make any particular point except that losses (ie 500 on the Dow) that might have provoked a post, comment (or mild scream) on the board a few months ago were becoming more commonplace and eliciting little reaction. Agree the Dow isn’t the best barometer. It is, however, widely watched and is usually placed first, above all the other indexes in the financial press.
Whichever index(s) you watch, if you string together multiple daily losses of around 1.5% they can add up in a hurry.
Latest losses according to Bloomberg …
Dow Jones -11% YTD
S&P -15.5% YTD
NASDAQ -24.5% YTD