stock market question

[nebo113]

Why is a 1% drop considered bad? 

[dismalist]

Why is a 1% drop considered bad? 

The news has to be about something! Oh my God, the world is ending!

Me, I have a completely accurate prediction about stock market prices -- they will fluctuate.

[clean]

 I have not looked at the standard deviation of returns lately, but I suspect, if measured on a percentage basis, 1% moves are probably rare.
As people tend to think of risk as 'bad returns' and not 'deviation in returns (which is the official finance definition), then a 1% drop is terrible, though a 1 percent increase would be Fantastic, and the result of 'my superior market timing and otherwise good, worthy, faithful living....   prayers to the Mr. Market god. 

Extended, though when things go down a lot, it takes a lot more to get it back.  For instance if something was valued at 100 and drops 20% (to 80), it would take a 25% increase (20/80) to get back to where it was. 

Hopefully this helps,


But reacting to the Dismal post....

"The World Ends at 10!   
    Details at 11!"