Hey everyone! I’m Derek Merkler, the military financial advisor and in this Tip of the Week, let’s time travel back to August of 2019 when U.S. stock markets had multiple weeks of losses since the highs of the month before. During this time, we saw financial headlines along the lines of “Why the world turned bearish today” and “The Dow dropped 600 points!” We saw a lot of fear-mongering with intentionally misleading headlines.
Since many headlines include the point changes in the Dow Jones Industrial average, I find it necessary to remind you that daily Dow point changes are going to be higher on average than a decade ago simply because the Dow is much higher. It used to be that a 300-point gain or loss on the Dow was a big deal because that amount would also be large on a percentage basis.
With the Dow around 27,000 as I record this video, a 250-point change is less than 1%. Even a seemingly large 800-point change is only 3%.
Contrast these amounts with an 800-point day during the financial crisis when the Dow was at 7,000. An 800-point change was 11%. Now that’s a big deal. A similar percentage change would now be 2,900 points.
Don’t let those headlines mislead you.
Thanks for watching! If you want to discuss more on this topic, you know how to reach me. Until next time!
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Remember, the topics discussed in this video are for informational purposes only and that past results do not guarantee future performance. If you would like to discuss your financial situation, please email me at Derek.Merkler@Parsonex.com.
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