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Tuesday, 10 Mar 2020
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Anatomy Of The Fall

You are supposed to use a log scale on a share price chart if looking at charts over a long period of time. The basic explanation is that a log chart shows two equivalent percentage price changes represented by the same vertical distance on the scale and to accommodate that the distance between the numbers on the scale decreases as the price of the asset increases.

I read one article this morning talking about the ‘Historic’ coronavirus correction. This is a 100 year chart of the Dow Jones using a normal price scale. The 1929 Crash and the 1987 Crash, because they were so long ago when the index was just a few hundred points, are now considered, on this chart, irrelevant.

But if you lived through 1929 or 1987 they were not irrelevant, they were

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