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They say that “numbers don’t lie, people do.” Be careful when you meet a number and be sure how it is being used and who is using it

January 23, 2015

Sometimes supposed experts gain credibility by spouting numbers, facts and figures.  I’m just back from a seminar where the ‘so-called’ expert claimed to close “98% of the deals she writes.”  She was a business broker and upon questioning from the audience couldn’t quite substantiate nor explain her statistics.
Among my e-mails was a Newsletter from Chief Executive Boards International (http://www.chiefexecutiveboards.com/) which shared some statistically based predictions by experts from last year that just didn’t quite pan out:
1.            FROM A YEAR AGO - 57% of individual stock investors were either “neutral” or “bearish” on the US stock market on 1/01/14 after the S&P 500 had just produced a +32.4% gain (total return) for 2013.  The S&P 500 then gained +13.7% during calendar year 2014 (source: American Assoc. of Individual Investors). 
2.            BORROWING - The April 2014 issue of Kiplinger’s predicted that the average 30-year fixed-rate mortgage (4.29% as of 4/30/14), would rise to “5% or 5.5%” by year-end.  The actual year-end rate was 3.87% (source: Kiplinger’s Personal Finance).   
3.            NO COST - In March 2009, the Congressional Budget Office projected that the taxpayer cost of the August 2008 TARP bailout would be $356 billion.  On 12/20/14 the Treasury department announced an overall $15 billion TARP profit (source: TARP).
4.            TOO HIGH - The Department of Energy forecasted on 6/10/14 that the price of gasoline would average $3.48 a gallon in the 2nd half of 2014.  Gas prices actually moved from $3.67 to $2.26 a gallon over the 6 months, averaging $3.17 a gallon (source: Department of Energy).  
They say that “numbers don’t lie, people do.”  Be careful when you meet a number and be sure how it is being used and who is using it.

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