Is It Really Volatile?

In his Saturday column, Jason Zweig questions whether that the recent turbulence in the market is significant or just statistical illusion. He quotes a Harvard behavioral economist who coined the phrase “denominator blindness.” This means that we focus intently on swift and vivid changes but overlooked the base against which we should measure them. Consider a 150 point swing in the Dow when it is in 16,000 territory, which is less than the 1% change. Compare that to Oct. 19, 1987 when a decli...