Beware of Stock Market Charts that Tell Half the Story

When viewing data charts intended to show that, historically, market declines have been worse than increases, investors should make sure they have the whole story before panicking. This according to a recent Bloomberg article.

Citing (and showing) charts that were recently posted in a blog by Lance Roberts, editor of the Real Investment Advice blog, the article states, “The reasonable-but-debatable point of the post was lost on the Chicken Little crowd screaming ‘History demands you sell your stocks now!’ ”


It goes on to explain that the charts only look at a portion of the data series leading up to the historic declines. The charts should not end at the occurrence of a crash, it argues: “That’s like ending the Western movie with the hero pinned down and outnumbered in a gunfight while the ingenue is tied to the railroad tracks with the train approaching.”