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Making Charts Say What You Want Them to Say
By JLP | July 10, 2008
Check out the following two charts:
Both charts show the daily values for the DJ Financials Index. And, if you could see the actual numbers, you would see that both charts show that the index is down around 30% in 2008. The only difference is the scale of the axes between the two charts. The first chart makes the performance look a lot worse because the axes scale is a lot smaller (maximum value of 750 and minimum value of 300 on the left axis). The second chart has a much broader axes scale with the left axis showing a maximum value of 1,000 and a minimum value of 0.
What’s the point of this? Well, you have to be aware that authors can easily make something look better or worse than it really is just by altering the numbers. Whenever I read an article with an accompaning chart, I ALWAYS look at the scale of the axis so that I can assess whether or not the author is trying to manipulate the numbers.
Just remember: things may not always be as bad or as good as they seem.
UPDATE: I decided to go ahead and make the Excel spreadsheet I used for this post available for download.
Topics: Investing |