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Sunday, January 25, 2009

Financial Graphs

Note to Bob:

Since things are looking so grim all around (financially speaking) I thought I ought to take a look at the statement that came in the mail this week. The only part that held any interest for me was the graph of "Sources of Portfolio Growth". At first glance it looked very dire: the value appears to have fallen to near zero. A closer examination reveals that is not in fact the case, it is just the partial scale along the left hand edge that makes it look that way. Using a partial scale makes the graph look really good when things are booming, but on the down side it makes things look absolutely horrible, when in fact there are just awful.

This has been one of my complaints about financial reporting for years. I understand why it is done, and I can understand it when newspapers do it. But I expect better from my broker. I know you guys don't personally prepare the graphs, but you might put a bug in the ear of whoever makes these kind of decisions. And give him (or her) a sharp tug on their ear lobe when you do it.

Update December 2016 replaced missing image.

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