The Panic Over the Dow

Most of the world is very concerned over yesterday's big drop in the stock market. The Dow Jones Industrial Average dropped 777 points, about 6% of the value of the DJIA and about $1.3 Trillion in value. I'm one of those people. Many others however are panicking while the nay sayers point out that looked at as a percentage of drop, it isn't even in the top 10.

This prompted me to do some research last night. Following are the top ten DJIA drops by percentage.

Rank	Date	Percent	Amount
1	October 19, 1987	22.61	-$508.00
2	October 28, 1929	12.82	-$12.82
3	October 29, 1929	11.73	-$30.57
4	November 6, 1929	9.92	-$25.55
5	December 18, 1899	8.72	-$5.57
6	August 12, 1932	8.4	-$5.79
7	March 14, 1907	8.29	-$6.89
8	October 26, 1987	8.04	-$156.83
9	July 21, 1933	7.84	-$7.55
10	October 18, 1937	7.75	-$10.57

So yesterday’s 6% drop only ranks about the 17th highest percentage drop in the 112 year history of the Down Jones Industrial Average. As a side note, the #1 position isn't quite true. On December 12, 1914 the DJIA plummeted 24.39%. For some reason the experts don't want to count that drop. The only explanation for not including it that I can come up with is that the stock exchange had been closed since July 30, 1914 when the Secretary of the Treasury ordered it shut down. During that period the Federal Reserve System was put into place to regulate the banking industry and to prevent bank panics and failures. (Hmm hasn't worked out so well it seems.)

Just FYI, here's the original twelve companies that formed the original Dow Jones Industrial Average 112 years ago:

American Cotton Oil Company
American Sugar Company
American Tobacco Company
Chicago Gas Company
Distilling & Cattle Feeding Company
General Electric
Laclede Gas Light Company
National Lead Company
North American Company
Tennessee Coal, Iron and Railroad Company
U.S. Leather Company
United States Rubber Company

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