
Wall Street Can’t Count - astrec
http://www.cringely.com/2009/02/wall-street-cant-count/
======
tomsaffell
This flaming of bankers is _emotion fueled_ not logic fueled. IMO, it's not
helpful. From the article:

 _So it’s a typo: no big deal, right? Yeah, but what a typo! It got past
Bloomberg and JP Morgan and pretty much all of Wall Street before someone
said, Hey, this makes no sense! ... And who was that someone? Me! A nobody_

I imagine that the vast majority of bankers who saw this chart realized this
error very quickly. I only have 2 data points to support that, but both the
bankers that I know spotted this instantly, on Jan 21 when they first saw the
chart.

~~~
biohacker42
_I imagine that the vast majority of bankers who saw this chart realized this
error very quickly._

Are you sure?

In my own entirely subjective and unscientific experience, a minority of
people on wall street are very good at math.

And they are usually not in positions of authority, some times, but not in
general.

~~~
Retric
I would like to suggest that showing changes in value as a square of the
difference might be useful because they multiply over time.

A stock can drop of 5% that occurs 13 times is less important than a single
50% drop. 40 drops of 5% are less important than a single 90% drop. DryShips
for example down ~95% from last year that's the equivalent of ~50 drips of 5%.

I suspect most people in finance understands the math, but at the instinctive
level most people just don't feel it. So what's the correct way to display
information like that visually? x, x log x, x^2

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iigs
Behold!

<http://ii.gs/fin-inst-caps-2007-2009.png>

I just copied the data out of the sheet. Mistakes are mine.

A little less alarming than the circles, for sure.

~~~
FraaJad
That's a good effort.

A vertical bar chart with the two measures next to each other is a better
representation because you are trying to compare them.

If you were to show something cumulative, say contribution of sales of
groceries, electronics and clothes towards your daily sales, then, the chart
you used is appropriate.

~~~
iigs
You know, I intended to chart blue = new, red = (old - new), so the red bar
would be the comparison, the total bar width would be the old value, and the
blue would be the new bar (compare in a single line), but I didn't check my
data, thus making me guilty of exactly the same sin that spawned the article.
:) Updated below.

Bahhhhh! Thanks for the catch!

<http://ii.gs/fin-inst-caps-2007-2009-fix1.png>

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m_eiman
Errors like this a embarrassingly common in all sorts of media. Something it
looks like genuine errors - charts made by someone who didn't take enough math
in school, but more often it's someone who wants to highlight differences of
some kind and skews the charts accordingly.

One of the favourite ways of doing this is to make a line chart of two values,
maybe mortage rates from two banks, and not make the chart's Y axis based on
zero (or put a zero there and make a little squiggle on the line). A minute
difference is made to look huge, and it annoys the hell out of me.

I expect things like this in marketing, but what -really- annoys me is when
public television does things like this on the news. They really should know
better...

~~~
ojbyrne
<http://en.wikipedia.org/wiki/Chartjunk>

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alecco
This is bs. The _first version_ was leaked and it was wrong, but it wasn't
released properly.

Cringely is making this story bigger than it was.
[http://ftalphaville.ft.com/blog/2009/01/22/51558/that-jp-
mor...](http://ftalphaville.ft.com/blog/2009/01/22/51558/that-jp-morgan-
picture-official-redux/)

"Apparently, the version we got was a “draft”. Oops."

s/Wall St. can't count/Cringely can't research like a decent blogger/

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newt0311
What the hell?!

This is what counts as front-page material? Here is a question for cringely:
maybe the chart is only designed to show subjective differences and the people
who made the chart concluded the scaling by diameter instead of area was a
better option?

And based on this flimsy evidence you denounce _the entire fscking industry?_
Does that make any logical sense to _anybody_ who has spent more than a
nanosecond giving any serious thought to this?

How arrogant can you get.

