Numbers Never Lie?

Innumeracy (book) - Wikipedia

 

Innumeracy is like illiteracy, only with numbers. There’s a lot of it going around–hopefully it won’t reach pandemic proportions.

I’m not talking calculus, trigonometry, or even  quadratic equations. I’m talking simple, easy, yet important math concepts.

Let’s use round numbers and examine the stock market’s recent actions. Before the coronavirus spooked the market, the Dow Jones Industrial Average was at 29,000 points (rounded). After the virus scare, it dropped to about 25,000 points (also rounded), a loss of 4,000 points.* The loss of 4,000 points in this case is about 14 percent (1- [25000/29000]).

If the market, while at its low point, gains 14 percent  it seem like the market has recovered all its losses. Down 14 percent. Up 14 percent. (14-14=0)

However,  (25000*1.14) = 28,500, not 29,000. It’s still 500 points below its high mark, which is still a loss of 2 percent. It would take an increase of 16 percent to recover all its value.

Well, I found it interesting.

 

*Did you ever try to spend a point? Don’t!

 

One response to “Numbers Never Lie?

  1. Of all my genius, smart, wise, gifted, talented, and contributory friends–I can find it difficult to believe YOU say “Numbers don’t lie.” Have you forgotten your years in medicine, as administrator even–when there were false positives and EEG readings in the ICU read “it was over?” Oh, Steve, you better than most actuaries that numbers are often “mystical,” not only mathematical.

    Mother Teresa, for example, was often criticized for the “insignificant scale” of work she and the Sisters of Charity undertook in the face of great need. It’s statistically true what she achieved was little or even negligible. But then Christianity is not a statistical view of life. Christianity is an anti-statistical proposition. Welfare is for a purpose—an admirable and necessary one–whereas Christian love is for a person. The one is about numbers, the other is about a man who was also God.

    The stock market speaks to us all, even though the majority of us don’t listen or don’t know or ACCEPT what it’s saying. Are we more excited than afraid?
    Is it telling us to be more prepared by manufacturing more “essential” products MADE IN AMERICA for ourselves and the world? It’s telling us that we are in a night-time journey, and most journeys have “secret destinations” of which the traveler is unaware. That’s when surprise, great, and wonderful discoveries are made. As a STEM person, Steve, you know most scientific discoveries are made by surprise…mystical surprise.

    Continued blessings and success my great friend. –rick

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