I always laugh when I hear a talking head on the radio/tv breathlessly reporting “THE DOW IS DOWN 500 POINTS!” What in the hell does that mean? I honestly doubt even the talking head would know. My guess is most folks don’t have a “500-point context”.

I don’t go to the store and buy any groceries with “points.” Gasoline is not priced in “points.” Even when I go buy a stock in the stock market, the stock is not priced in points… about the only people dealing in “points” are the sick freaks who think credit card reward points are a pathway to vast riches.

So why do we insist on reporting stock market moves in “points”? The far better, and more relatable, way to report stock market news would be in percentages.

Context

If someone told you that your investments are down 500 points, do you have a relatable context? Or do you think, “Wow, sounds scary” or “Hmmm, not sure if that’s bad or not”? Now - what if someone told you that your holdings are down 1.25%? More relatable?

So when you hear a talking head losing his/her/they/zoi breath because the DOW is down 500 points, the context is this:

1. Dow Jones isn’t a person but a reference to Charles Dow and Edward Jones, two financial journalists who co-founded Dow Jones & Company in 1882. Charles Dow, a pioneering market analyst, created the Dow Jones Industrial Average (DJIA) in 1896 to track the performance of major U.S. companies.

2. The Dow is around 40,000 these days, which refers to the Dow Jones Industrial Average (DJIA) index level. This is a weighted average of the stock prices of 30 major U.S. companies, like Apple, Boeing, and Goldman Sachs. The number itself is a point value - not dollars - calculated by summing the stock prices of these companies and then dividing by a specific divisor (the "Dow Divisor" is currently around 0.151 as of early 2025).

3. If the Dow is down 500 points, that is a drop of about 1.25%

4. Around 80% of all trading days fall within a range of +1% to -1%.

5. A drop of 500 points is really no big deal. A touch outside the norm, but of no concern.

Pro Tip

If you use an App to look at stocks and stock movements, set the screen so it shows % moves and not Point moves:

Here is my Apple App this morning, show the difference in % or Points:

This will give you a more relatable context as to what the market is doing on any given day.

VERY IMPORTANT

Do NOT - let me repeat this - DO NOT make any “spur of the moment” investment decisions based on what these indexes do on any given day!

I know folks - I talked to several of them over the past 2 weeks - who got caught up in “The Rapture” of Tariff Wars and sold a bulk of their investments. Not good. Not good at all.

When Tariff War 1.0 hit the news two weeks ago, the stock markets started dropping and the news media cheered it on as if it was a knife they could personally twist in orangemanbad’s back, I had friends who sold.

When Tariff War 2.0 hit the news last week, these folks missed out on a 10% week of gains, because they got cold feet.

If you miss out on a week of 10% gain, your portfolio will never recover between now and the time you plan to tap it when you retire. I’m serious, that is a permanent ding from which you will never recover.

Do not do that.

Points to Remember

1. Look at stock market moves in percentages, not points. Better context. One-day moves of +/- 1% (or less) are normal. Moves of +/- 3% are relatively rare and mean there is big news afoot.

2. Do not make investing decisions based on a few days worth of media hype.

3. Review your portfolio quarterly and do not let manic media mayhem alter your investment philosophy, timeline, or strategy.

4. Has anyone checked on Jim Cramer lately…

That’s all I’ve got for this week. Cheers, and thanks for reading!