Chart Crimes

Stretching a linear axis vertically to prove a point. Don’t do this.

Some things should be shown as a level, not a percent change. The ten-year yield going from 2% to 2.1% is not a 5% change, it’s a ten basis point move. The same holds for the VIX. Don’t do this.

So many things wrong with this one. This chart provides zero information. Comparing dollars across multiple decades have to be real, not nominal, and this should be shown as a percent change, year-over-year works.

Using the lowest point in a cycle to support your narrative is not a good look…

…Neither is choosing the high point.

Showing the percent change on an asset whose interest or dividend is a big percent of the total return is a big no no. The price of BND is only up 6% over the last decade, but the total return is 48%.

Do not use monthly candle stick charts in the middle of the month, or weekly candle sticks in the middle of the week. This is what you would have seen on October 15, 1987…

…The real thing looks a little different.

“I’m expecting this to resolve in an explosive fashion, one way or the other.” Technical analysis on economic charts. Just don’t.

Comparing lines that have absolutely nothing to do with each other is a chart crime. This gem comes from Joe Weisenthal 

This is hardly an exhaustive list. Chart manufacturers have endless ways to fool you. Stay woke.

 

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