Asset Class Return - Pictorial Perspective

[Xerxes]

https://novelinvestor.com/asset-class-returns/
 

Edited December 11, 2023 by Xerxes

[james22]

No disrespect, but I've always hated that chart.

 

If the purpose is to confuse customers, i.e. to claim that fund class does not matter, then this chart succeeds.  However, on closer look, one might observe that three of the 12 classes showed up disproportionately at the top rank so the chart is somewhat misleading.  Directional evidence is buried in the palette of colors; but how to separate the noise from the signal?

 

The "best" graphic is one where form matches function.  If my goal is to help customers understand their expected return and risk for different fund classes over the last 15 years, then the side-by-side boxplot works wonders.

 

https://junkcharts.typepad.com/junk_charts/2006/05/boxplots_to_the.html

 

The idea, I guess, is to be able to see which asset classes have done relatively well or poorly over time: within each year, the best-performing asset class is at the top and the worst is at the bottom. If you pick out a single color, it’s barely possible to follow how it has performed (relatively) by seeing where it sits in each year … sort of mentally connecting the boxes into a line graph. ...

 

This is a very bad graphic. Although the actual performance for each class in each year is given numerically, the graph itself gives no information about this, which is after all the most important characteristic of an investment.

 

https://statmodeling.stat.columbia.edu/2006/05/23/post_8/#more

 

https://statmodeling.stat.columbia.edu/2006/06/06/displaying_fina/

[blakehampton]

32 minutes ago, james22 said:

No disrespect, but I've always hated that chart.

 

If the purpose is to confuse customers, i.e. to claim that fund class does not matter, then this chart succeeds.  However, on closer look, one might observe that three of the 12 classes showed up disproportionately at the top rank so the chart is somewhat misleading.  Directional evidence is buried in the palette of colors; but how to separate the noise from the signal?

 

The "best" graphic is one where form matches function.  If my goal is to help customers understand their expected return and risk for different fund classes over the last 15 years, then the side-by-side boxplot works wonders.

 

https://junkcharts.typepad.com/junk_charts/2006/05/boxplots_to_the.html

 

The idea, I guess, is to be able to see which asset classes have done relatively well or poorly over time: within each year, the best-performing asset class is at the top and the worst is at the bottom. If you pick out a single color, it’s barely possible to follow how it has performed (relatively) by seeing where it sits in each year … sort of mentally connecting the boxes into a line graph. ...

 

This is a very bad graphic. Although the actual performance for each class in each year is given numerically, the graph itself gives no information about this, which is after all the most important characteristic of an investment.

 

https://statmodeling.stat.columbia.edu/2006/05/23/post_8/#more

 

https://statmodeling.stat.columbia.edu/2006/06/06/displaying_fina/

Edited December 11, 2023 by blakehampton

[james22]

[james22]

[james22]

[Xerxes]

18 hours ago, james22 said:

No disrespect, but I've always hated that chart.

 

all good James.

[CorpRaider]

Here's to a 2024 through 2029 REIT run that shapes up like 2009 through 2014.