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Graphs for the Lost and Bewildered

March 31, 2009

Many, many tables and graphs have been published leading up to and during the current global financial crisis. The GFC, as it is called. But mathspig wants students of all ages to know that they can be mislead, ripped off and/or lose their life savings if they cannot read graphs properly.Mathspig found the following graphs in full page ads in Good Weekend The Age 26th July 2008, Sunday LIfe The Sunday Age 3rd August 2008 and The Weekend Australian Magazine, The Australian 2-3rd August 2008.

Mathspig is not saying that AMP set out to mislead investors but it would be easy for anyone unfamiliar with graphs to jump to the wrong conclusion. Why?  Have a look at the graph.

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What’s the problem???? Have a look at the scale on the vertical or y-axis. it is not linear. In fact, it is logarithmic. It keeps doubling as you move up the y-axis. This  compresses the graph dramatically at the top. The following graph is clearer. It is a linear graph representing another ASX Index this time  the TOP 200, but it gives a much clearer picture of the the movement of share prices on the stockmarket in the US Sub-prime/oil crisis marked on the graph above. In fact, share prices dropped by nearly 50% from November 2007 to August 2008.

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One comment

  1. […] See Graphs for the Lost and Bewildered […]



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