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Well done site. One important nit pick: never use charts that don’t start from 0 on the y axis. I was looking at a stock that had a yoy growth rate reduction of
by dchuk 1y ago
Well done site. One important nit pick: never use charts that don’t start from 0 on the y axis. I was looking at a stock that had a yoy growth rate reduction of 6% (from 39 to 33 for each respective yoy period), and the chart showed an aggressive down to the right trend line because the y axis started at 33% instead of 0%.
Charts like that show more detail sure, but everyone freaks out in reaction to them. Always zero out your graphs.
- WheatMillington 1y agoI disagree with this. Zero is an arbitrary and often useless intersection. A stock worth $300 is going to show meaningless movements at that scale.
- wisemang 1y agoThis is correct. GP’s rule should be adhered to for bar charts though. Absolute values there are expected. For line charts continuous (ish) over time, people are usually more interested in relative change in a time period so ok if y axis starts closer to the minimum value of the series in that range.
- ReaLNero 1y agoYeah, I would say the y-axis range on charts should be set at "3-sigma likelihood of observation" thresholds. Not everything that's charted can be framed as sampling from a distribution, but the principle of manually setting chart ranges would nonetheless still apply. For instance, if we're charting someone's body temperature, we would likely fix our y-axis to 80-110.
- dchuk 1y agoThat’s the exact point?
- WheatMillington 1y agoNo, it isn't. People are interested in whether a stock has volatility, and whether it has moved x%. If a $10 stock loses $1 it should show a roughly matching pattern to a $200 stock losing $20. Intersecting at zero will show a very large movement for the $10 stock and a very small movement in the $200 stock, despite the effect being the same to stockholders.
- degamad 1y ago> Intersecting at zero will show a very large movement for the $10 stock and a very small movement in the $200 stock... How so? Surely both will show a 10% movement?
- deleted 1y ago[deleted]
- farrellm23 1y agoAdding to this, stock prices should be plotted on a log scale since it is log returns that are roughly normal, and then 0 really makes no sense.
- bufferoverflow 1y agoZero is not arbitrary when it comes to the stock price.
- Etheryte 1y agoIt very much is, because stocks don't start at zero and your entry point will also not be zero. You can be deep in the red long before the stock gets anywhere close to zero. Even when a stock hits zero it doesn't always mean something useful, look at the Hertz bankruptcy for a good example. As far as stocks are concerned, zero is arbitrary and pretty universally a useless reference point.
- vincnetas 1y agoOne child comments makes a better suggestion. Display only a change in % since period start. Who cares about the absolute price. You only care about percentage change. And yes, all charts would automatically start from 0 as a side effect.
- apeescape 1y agoChange could go to negative though, so even though 0% is included in the chart, the true possible bottom value of the chart is -100%.
- am3101 1y agothere are definitely times when you care about absolute price—e.g., if you are trading options that strike at given prices, or if the company has convertible debt that can be converted at a given strike price, or if there is a risk of the exchange delisting you if you consistently trade below $1. this would be a good toggle but both matter
- Etheryte 1y agoCharts like this are standard practice in finance. You're interested in the relative movement, not absolute numbers, so a chart that starts from zero is practically useless since the change you're trying to see is too small.
- montebicyclelo 1y ago> Always zero out your graphs Great way to end up with useless graphs where you have a tiny line at the top that's been compressed to the point where you can't see any changes... The "rule" about ensuring axes are zeroed is for bar charts not line graphs.
- Breza 1y agoAgreed. The Wall Street Journal suggests setting the y axes so your data fits in 2/3 of the available space (unless you have a specific reason for a different setting, such as putting zero as the minimum for revenue).