Question: Stock Price Charts? What is the purpose of having the price charted  on  logarthmic paper??

Answer: Logarithmic charts are used for long-term charts.\n\nLet's take the Dow Jones Industrial Average as an example. It's currently trading around 11000 or so.\n\nIf we have a look at the Dow back to say 1940 (the dow was at 150), the start of the chart looks like almost a flat line from 1940 to 1955.  The Dow actually rows to almost 500 in 1955.\n\nThe problem with a linear scale is that takes the maximum levels into account.  So a rise from 150 to 500 (a three folder increase) looks insignificant compared to the period between 1990 (dow was around 2700) to 1998 (when the dow got to over 9000, yet they are both dramatic movements.\n\nSo by using a log/semilog scale we can compare the relative price movements rather than the physical point changes.\n\nSo, a 3 fold increase looks the same whether the it's from 150 to 450 or 2700 to 8100.\n\nSee the sources below for charts of the Dow showing the two different pricing scales.
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