To Log or Not to Log, Part V

The Shanghai stock market has undergone some wild gyrations over the last year… and back in 2008. Following up on To Log or Not to Log, Part IV:

Here’s the picture, as usually depicted.

Figure 1: Shanghai composite stock market index, end of month close. August observation is for 8/26. Source: Quandl.

The movements look a bit different (but still scary) in logs.

Figure 2: Log Shanghai composite stock market index, end of month close. August observation is for 8/26. Source: Quandl and author’s calculations.