In the past, I’ve written about how financial media spread panic, and how handy the Dow Jones Industrial Average is for them. Right now, this very day, I can give you a case in point.

As I type, the DJIA is off by 311, which takes it to 16,680. That is a decline of 1.83%. And Marketwatch is splashing the headline in huge bold letters: It’s getting ugly – Dow nosedives by 350.

Let’s take this one out with a series of quick snapshots, like in urban warfare training.

• Obviously the index has rebounded by a fair bit, but the frantic headline remains. An alarming percentage of people absorb headlines as gospel, making them prey to the modern art of the misleading headline.
• 1.83% is not that ugly. It’s a definite down day if that’s where it ends (and as I write, there are two and a half hours left in the trading day), but the sky isn’t falling. Ebola wasn’t found in all our supermarkets. A Kardashian didn’t have a wardrobe malfunctian.
• Notice the verbiage: ‘ugly.’ Implies there’s blood in the aisles. There isn’t. ‘Nosedives’ emphasizes the deception: ZOMG PANIC DO SOMETHING OMG OMG YOUR ALL GONNA DIE OMG THIS IS THE END! This is the equivalent, in terms of common sense, of recommending someone get an ambulance ride to the ER because he or she woke up with a headache.
• On the year, the DJIA is slightly down. It began the year at about 17,250. That’s fairly close to a flat year, if it ended today, which is not great, but it hasn’t been very volatile for most of the time. It’s been dull, and the media haven’t had anything to wet themselves over. Anything will do.
• For the last five years, the index is up from almost exactly 10,000. I’m not doing the arithmetic, but that looks to me like annual gains of about 10%. After five years of that, you’d probably start to anticipate a flat year. No bull market is eternally sustainable. When it hiccups, that’s not a ‘bloodbath,’ another term MW is bandying.
• People, in obedience to punditry whether they realize it or not, are still reacting to the Dow’s numeric change the way they did when it was at 10,000, or even 5,000, and such a numeric change was greater. When the index was at 10,000, a decline of 350 would be 3.5%, which is a bad day, but not a disaster. If you watch indices long enough, you’ll see those days a few times a year. At nearly 17,000, a decline of 350 is 2%, which is the kind of bad day you’ll see rather more often in a given year.
• It follows that, after paying any attention to the Dow in the first place, the next dumbest investing blunder is to pay attention to its number rather than its percentage. Show me a day when it’s down by 10%, or 20%, and that’s at least got me looking at valid indices to see if there really is a bloodbath. For 2%, it’s not worth my time.
• In the meantime, we can use MW’s helpful tools to find out what’s driving the decline. There are thirty stocks in the Dow. Microsoft, Apple, and Nike are taking the biggest hosings, along with Goldman Sachs. The first three are down over 4% each. It’s raining, but the sky isn’t falling. Three of the companies most unlikely to fail, are seeing a lot of selling today. That is all this means.
• Since the DJIA is compiled according to a formula that was infantile and distortionate at inception (1896), it’s idiotic anyway. On a field of baseball players maneuvering to hit behind the runner, put the curve ball on the outside corner, and shade toward the line to avoid that long hit into the corner that could become a triple, the DJIA is the naked fan who streaks the field while we’re all trying to be observant.
• Marketwatch is a publication of The Wall Street Journal, which is a publication of Dow Jones & Co., a subsidiary of News Corp. So you’ve got a website owned by the people who maintain this index. And they love this index, because the S&P 500 (a saner large-cap index) is around 2,000. You won’t get many triple-digit days from it, so it’s harder to generate a freakfest with the S&P.

Behold the current state of a venerable name published by a venerable name. Misleading garbage.