The Dow Jones Industrial Average, the most-commonly used index for the stock market, has seen daily 200-point changes in both directions in recent weeks. Not so long ago, a 200-point drop was tantamount to a crash. Now, it’s just daily activity. The producer price index was higher than expected last week, so the market was off 500 points. What’s going on?

There’s more. This week, the consumer price index was in line with expectations, and the market jumped almost 400 points in two days. IBM reports lower than expected earnings, and expects a slowdown in the first quarter of 2000, and the market opens down another 200. Every monthly or quarterly measure of economic activity, from the various price indexes to housing starts to new unemployment claims, seems capable of producing huge market moves.

Americans, never known for being big savers, have become a nation of investors. Not so long ago, the stock market was the playground of the wealthy. Ten percent of all adult Americans owned stocks or mutual funds in 1965. By 1990, that number had grown to 21 percent, and in 1997, 43 percent of adult Americans own stock. The Federal Reserve estimates that 28 percent of the average U.S. household wealth is now composed of stock market investments, up from 12 percent in 1990. Alan Greenspan, the chairman of the Federal Reserve Bank for the last 12 years and the most powerful unelected official in America, has guided the economy through an unprecedented period of growth, helping to lower the inflation rate from double digits to 2 to 3 percent of this year.

Mr. Greenspan wants to make sure inflation remains low, and has seen the remarkable rise in the stock market threaten to undermine his successes. He has tried a variety of techniques to take the air out the market bubble, describing it as irrationally exuberant in a speech which took the Dow down 3 percent in one day. But the market keeps driving forward. Some technology stocks have demonstrated 100 percent gains in a year. Internet stock trading allow investors of all stripes to buy and sell stocks for virtually nothing. Information about stocks, once the expensive property of stockbrokers and traders, is now available online for free.

A recent book by James Glassman and Kevin Hassett predicts the Dow will explode to 36,000 in the next decade. Stock market bulls point to the fact that the baby boomers are moving into their most productive years, the world economies are recovering, and technology is making everyone more productive.

The market bears warn of a stock market “bubble” that is sure to burst, and that average stock valuations are the highest in recorded history. Internet stocks have commonly been compared to the Dutch tulip mania of 1637, when some tulip bulbs were selling for more than farms.

Over time, stocks and mutual funds usually reflect the health of the economy and are still the best investment one can make. While day traders may panic over Mr. Greenspan’s next speech, be glad that he is watching over this economy. “Buy and hold” seems a good investment strategy as long as Mr. Greenspan is at the helm.