A Foolish Take: Don't Let the Dow's Big Point Drops Scare You
On Friday, Aug. 23, the Dow Jones Industrial Average (DJINDICES: ^DJI) fell 623 points, reacting negatively to another round of escalations in the trade dispute between the U.S. and China. Various news sources reported the drop as a major plunge, fanning fears that a longer-term pullback in the market might be right around the corner.
Yet concerns about how stocks will do in the long run get exaggerated when you look at the Dow's point moves. That's because the Dow's long history and consistent rise over more than a century have pushed the average so far upward that what used to sound like monumental moves are now much more pedestrian.
Friday's performance gives a good case in point. The 623-point drop was the 17th-biggest downward move for the average in its history. Yet it only represented a percentage change of 2.37%. That was the smallest percentage move among the Dow's 20 biggest point declines.
Source Fool.com
