What happened to the stock market in early 1995?

[dios.del.sol]

When I look at the behavior of the stock market there seems to be a significant qualitative difference in behavior since early 1995. The booms and busts are much larger. What's going on here? What happened around that time to cause these changes?

[onlykelsey]

Hmm.  The SEC authorized electronic exchanges in 1997 or 1998 which would presumably lead to faster and more reactive trading, but that seems a couple years too late.

[Tyler]

1) The 20-year stock boom in the 80's and 90's was the exception and not the rule.  The 70's and 2000's weren't nearly as forgiving.
2) Growth charts like that always visually under-state price swings the longer back you look.  Try looking at the same data with a logarithmic scale.  Here's a good explanation.

[acroy]

The squiggles are larger,
But look at it on the log scale

And it looks a lot smoother :)

[dios.del.sol]

I was wondering about the scale issue. So maybe it's just an artifact of the starting date for the plot. Interesting how even 1995 (20 years ago) isn't a proper long-term view...

This is a silly question, but I can't find data that far back, even on the St Louis Fed site. Can you send a link?

[nereo]

I was wondering about the scale issue. So maybe it's just an artifact of the starting date for the plot. Interesting how even 1995 (20 years ago) isn't a proper long-term view...

This is a silly question, but I can't find data that far back, even on the St Louis Fed site. Can you send a link?

you can download monthly SP500 data going back to 1871 compiled by Robert Shiller in a *.xls file by going here.

FWIW, Morgan Housel wrote a great piece about volatility over the last 100 years at different time scales.  TL/DR: volatility today is about average compared to other decades.

[Dances With Fire]

Data aside, and as an "outsider" looking in...This was a time when 401(k)'s and IRA's became increasingly popular.

Money magazines flooded the news stands.(Anyone remember the Mutual Fund's magazine?)

 High-profile money managers were looked at as Rock stars and people were trading funds like they were stocks. Then Day-trading became popular. IPO activity picked up.

(Everyone) I knew was talking about the stock market.

[ransom132]

I was wondering about the scale issue. So maybe it's just an artifact of the starting date for the plot. Interesting how even 1995 (20 years ago) isn't a proper long-term view...

This is a silly question, but I can't find data that far back, even on the St Louis Fed site. Can you send a link?

you can download monthly SP500 data going back to 1871 compiled by Robert Shiller in a *.xls file by going here.

FWIW, Morgan Housel wrote a great piece about volatility over the last 100 years at different time scales.  TL/DR: volatility today is about average compared to other decades.

I was looking at the S&P from 1920 to 1934, it wen't up sky high only to crash at it's lowest in 1934. They didn't call the roaring 20's for nothing.

[bobechs]

I was looking at the S&P from 1920 to 1934, it wen't up sky high only to crash at it's lowest in 1934. They didn't call the roaring 20's for nothing.

One more outburst like that and I'm calling Apostrophe Control on you, young man.

[PhysicianOnFIRE]

I was looking at the S&P from 1920 to 1934, it wen't up sky high only to crash at it's lowest in 1934. They didn't call the roaring 20's for nothing.

One more outburst like that and I'm calling Apostrophe Control on you, young man.

Wouldn't be the 1'st time.

'

[WerKater]

The squiggles are larger,
But look at it on the log scale

And it looks a lot smoother :)

I thought of that, too. I think this is the one and only correct answer.