STREET DOGS: Fake news
Spotting ‘fake news’ isn’t always easy but there are a few simple things to look out for
There’s a 99.7% chance you’ll read false and misleading statistics. — Anonymous Spotting "fake news" isn’t easy but here are a few simple things for investors to look out for: • One of the more common ways that someone will try to bamboozle you is by misusing charts. Always check the axes, as scale can easily distort a trend. It’s easy enough to make small changes look large by reducing the scale of the Y axis and exclude unfavourable history by narrowing the range of the X axis. • Another common "error" is the use of a genuine statistic in the wrong context. In describing market potential, for example, management will tell you that 600-million people worldwide could benefit from using their product (true), but forget to mention that the high cost of it makes it unaffordable to most. A valid statistic needs to be more than accurate, it must be relevant. • Benchmark flip-flopping — last quarter sales up 60% on prior quarter? Wow. But is that how sales are always compared? Most compan...
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