Tuesday, October 7, 2008

Top 20 one day percent decreases in Dow Jones

Last Monday the Dow Industrials fell by 777 points after the US Senate didn’t pass the 700 billion bailout package. Most news reporters informed the public that Mondays drop in the oldest US stock index was the largest one day point drop ever. They were correct in this one. The issue is that this was not the largest drop in percentage terms. In other words even though last Mondays drop was higher than the one on Black Monday in 1987, it was much lower in percentage terms. Armed historical with data from yahoo finance going back to 1928 I isolated the 20 largest one day percentage drops in the Dow Industrials. It seems like the largest point drop ever turned out be the 18th largest percentage drop. You could check out the original spreadsheet from this link.

The average performance one year after a large one day percentage drop was 6.46% (without accounting for dividends).

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