## Why you have to watch those tricky economists!!!!!

July 29, 2009

MATHS IN THE REAL WORLD

which is everywhere!!!!

Economists may not set out to mislead the public, but they do produce graphs that can easily be misread. Here is a graph from AMP (again) published in THE  AUSTRALIAN  on 29/7/09 (p12 . Wealth supplement.).

Have a look at the graph. What’s wrong with it?????????????

Firstly, you cannot invest money in 1928. To be relevant to you, start looking at the graph when you first had money to invest. 1999? 2008?

Secondly, look at the Y-axis scale. This is NOT a LINEAR graph. This is a logarithmic scale. That little blip drop in Australian Shares value at the end is worth \$331,375!!!!!  If you had \$1,000,000 (Just retired, for instance) and put your money in shares in October 2007 that is how much money you would have LOST.

Mathspigs convert this Australian Shares graph to a linear graph. Just take a few points but you will need a Y-axis scale that goes up to \$1,000,000.

One more thing Mathspigs, beware of men (or women) in suits pointing at graphs.