Investors from all generations generally hate large fluctuations in stock prices. Volatility creates uncertainty and makes financial markets feel reckless, random, or out of control. In “Autumn Volatility: Noise or Prelude?” on our blog (September 16, 2014), we noted that the intra-day volatility had increased somewhat lately, but we concluded that it likely did not necessary portend a negative outlook for stocks. The pick-up in volatility has continued since with the Dow Jones Industrial Index (DJIA) rising or falling more than 100 points in each trading session that following week – and in eight of the last 14 trading sessions.

Why should you not care? Because triple digit moves (+/- 100) on the DJIA are simply not a big deal. Sure, 100 points sounds like a significant swing, and if your perspective is anchored in the decades when the market traded at levels like 500 or 1,000 or even 3,000, it was a huge move. But the index is 17,000 today. And at this level, in percentage terms, a one hundred point swing amounts to a whopping 59/100ths of one percent (0.59%). That’s plus or minus $590.00 on a $100,000 portfolio.

Seasoned investors have an understandably difficult perspective to overcome as a result of decades of investing when 100-point moves were significant and absolutely unnerving. At Dow 2,500 (circa 1989) a 100-point move equated to a four percent (4.0%) change – the equivalent of 680 points on today’s DJIA. Younger investors can’t possibly have this experience bias, so I can only surmise that their distrust of market volatility stems from the financial media’s fixation on “triple digit moves” as a news-flash-worthy attention getter.

As always, the proper perspective helps investors across all generations make objective, non-emotional investing decisions. According to Jeremy Siegel of the Wharton School of Business in a recent interview on CNBC, the average daily change in stock prices based on more than a century of data is 75/100ths of one percent (0.75%). So just to be historically “normal” or average, today’s DJIA should register daily gains or losses of roughly 128 points. Instinctively, no one likes the sound of that, but it is not nearly as scary as it sounds.