Don Thurston Blog

If a Decline is 1%, How Much is a Plummet?

Many chapters have been written about standardization of weights and measures. As commercial boundaries expanded, merchants were required to report not only honest weights but to employ the exact same information across widely expanding trading areas. Too many merchants were exploiting both buyers and sellers using manipulated information.

Train scheduling confusion was the order of the day until Sir Sanford Fleming established a worldwide system of time zones. One outcome of the French Revolution is the metric system of weights and measures, truly a major initiative that swept the world. How would our world look without navigational aids? The Global Positioning System has no equal, impossible without measurements so sophisticated and precise to defy our imagination.

So if accurate and meaningful weights and measures are the standard in most disciplines, how is it that financial information leaves much to the imagination? Otherwise how would we encounter such strange expressions as the “the market plunged at the closing, the index tanked as investors headed for the exits and oil stocks surged after an embargo slowed shipments from — (fill in the blank).

To be sure much of this is journalistic hype to stir the financial news pot. A sister to this mind grabbing showmanship is the weather channel where breathless commentators using stark graphics report on disaster after disaster.

No amount of reason will convert the journalists to a less strident style. A solution is to author a new system that quantifies the words and expressions. In so doing, writers can use words and analysts can use numbers which can be translated from one form to another depending on the audience.

An initial step is to develop benchmarks. For example, a decline is set as one and a plummet represents one hundred. In between we can describe a drop as 25, a collapse as 50, a tanking as 75 and finally a plummet as 100. For increases the range will be 1, called a rise, to a maximum of 100 designated as a surge. In between a boost is 25, a burgeoning is 50 and an escalation is 75.

Clearly there are details to be worked out. In particular how to describe those changes between the verbal and numeric data points. Difficult but certainly possible, as is the case with inches, feet, yards and miles.

Now news casters can retain the dramatics and the technical analyst’s stature will improve by communicating with a larger and more diverse audience.

Thanks for reading!

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