Moving The Goalposts

One of the most common ways to distort the truth in investing is to move the goal posts. For example,  Commodities are a great investment; From 2000 through the middle of 2008, they returned 231%, compounding at 15% a year. Over that time the S&P 500 earned nothing. See, by cherry picking the data, you’re not necessarily lying, you’re just not telling the whole truth either.

Here are a few more examples of what the distorted truth can look like.

From 2003-today, Emerging Markets grew 11% a year. But from 2008-today, Emerging Markets fell -1.7% a year.

The reason why the numbers are so different when you change the goalposts is because Emerging Markets lost 65% of their value during the Great Recession and never fully recovered.

Over the last 20 years Cisco grew 9.5% a year. But over the last 16 years, Cisco fell 4% a year.

The reason why the numbers are so different when you change the goalposts is because Cisco lost 90% of its value from March 2000 through October 2002.

From 1970-today, Gold grew 8.2% a year. But from 1980-today, Gold returned just 1.8% a year.

The reason why the numbers are so different when you change the goalposts is because from 1970-1980, Gold gained 1734%, or 35% a year. 

From 1970-today, Japanese stocks grew 9.1% a year. But from 1990-today, Japanese stocks lost -0.2% a year.

The reason why the numbers are so different when you change the goalposts is because from 1970-1989, Japanese stocks rocketed 6067%, and then fell 60% from the end of 1989 through the spring of 2003

From 1929-today, U.S. stocks grew 9.4% a year. But from 1932-today, U.S. stocks returned 11% a year.

The reason why the numbers are so different when you change the goalposts is because U.S. stocks fell 90% during the Great Depression. 

When looking at returns, be sure that the start date begins at inception and ends at the most recent period. If it doesn’t, make sure to find out why because cherry picking dates is the red flag of all red flags. By massaging the numbers, you can get the truth to tell any lie you want. This is what Benjamin Disraeli had in mind when he said “There are three kinds of lies: lies, damned lies, and statistics.”

 

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