Charting value (maybe)

May 19, 2009 in Economics

Silicon Valley Insider presented this as its Chart of the Day today, saying it indicates the success of Microsoft's "Laptop Hunter" ads:

First of all, it takes some digging to learn what this scale even means, which brings us to a violation of charting rule #1: do not use a misleading axis! The true scale goes from -100 to 100, as some Googling will reveal, so why does the graph go from 0-70? Probably, sadly, for dramatic impact. A zero score means people have as many positive comments as negative; 100 and -100 presumably represent purely positive and purely negative comments, respectively.

Next, consider the volatility of the chart - the standard error of these estimates must be enormous. Apple's "downfall" crosses a distance that it recently rose in just one week. Again, this doesn't make the chart wrong, it just makes it difficult to asses whether Apple's downward move is an increase in negative comments or a decrease in positive comments following an abnormal burst of them in mid-March.

The best evidence for some sort of regime change is that the two firms are closely correlated for the first half of the chart, and negative correlated for the second half - though, without proper analytics, it's hard to see how "real" the effect is. But the early beta moves and later alpha moves suggest that - to the extent the chart is "real" - one firm or the other experienced some sort of idiosyncartic event near the middle of the chart.

But what really bugs me is the annoations the SVI added to the chart (not part of the original presentation). The spike for Apple isn't the new iMac (which was underwhelming released with zero fanfare), it's the preview of the iPhone 3.0 software!

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