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Yesterday’s Market Drop in Perspective
By JLP | February 28, 2007
The 10-biggest drops in stock market history.
I have noticed a couple of bloggers talking about yesterday’s 416-point drop in the Dow Jones Industrial Average. Then, this morning I see this article on the front page of MSN titled Should You Fear a Market Meltdown (titled in such a way to get LOTS of attention).
Yes, 416 points SEEMS like a lot of points. I mean, according to my local newpaper, yesterday’s drop was the 7th largest point drop in history as the graphic below shows (I highlighted yesterday’s drop):
So, point-drop wise, yesterday’s drop ranks right up there with the big boys. However, lets look at it percentage-wise:
Consider this: Had the market dropped 22.61% like it did in 1987, it would have been down 2,856.18 points yesterday!
Always remember that the higher the market goes, the GREATER the point drop is even though the percentage drop may not be that big. It’s kind of like tax cuts. Say taxes drop 10% for everyone. Someone who pays $100,000 per year in taxes will get a $10,000 tax cut while someone who pays $10,000 per year will get a $1,000 tax cut. The percentage cut is the same, the dollar amounts are vastly different.
Topics: Investing |
