A chart is essentially a digital photograph of one or more data series. Exponential growth in computing power in recent years has made data mining — and the charts it spawns — a relatively simple process. When created with skill and insight, a chart can help investors visualize fundamental data that might seem obtuse in numerical or prose form. If the chart covers several years or decades, it can put the current figure in historical context, thus providing valuable perspective.
Wachovia publishes an exceptional monthly chart book covering domestic and international markets. The free 32-page document, which you can download as a PDF, starts with an executive summary of global economic conditions, followed by tables displaying Wachovia’s forecasts for economic growth and interest rates by region and country. On each subsequent page, a few charts are accompanied by detailed yet accessible explanations for what you’re seeing. The information will be especially useful to investors of country-specific exchange-traded funds. Four or five months of back issues are archived online.
If you’re looking for a specific chart, you’ll probably find it at Economagic, which lists more than 200,000 data series in its free collection. The homepage contains links to data from the Federal Reserve System, Census Bureau, Bureau of Labor Statistics, Congressional Budget Office and Department of Commerce, among others. There’s also a link to multiple stock indexes at the bottom.
Aside from one-stop shopping, a key feature of Economagic is its ability to turn data into charts. Let’s say you want to measure the progress being made by U.S. households in digging themselves out of debt. Under U.S. Government, click Household Debt Service and Financial Obligations Ratios. Next, select Financial Obligations Ratio to view hard numbers. Then click GIF Chart to see them as a picture. You can also download the data into an Excel spreadsheet (click Excel at the top or bottom; you must be a paid subscriber), transform the numbers in multiple ways (select Transform This Series) or save the chart as a PDF.
Finally, Bespoke Investment Group publishes free charts on its website that are interesting and informative. Though many use technical analysis, you’ll also find fundamentals-based charts, including some that stretch over several market cycles. Bespoke’s charts are archived weekly on the left side of every page, just below links to two dozen investment websites.
For all their potential value, charts can leave wrong impressions as well, especially those that show a supposed relationship between two data series. As a chart published many years ago in Barron’s demonstrated, correlation doesn’t prove causation. The Barron’s chart displayed two lines moving in virtual lock step. One was the annual growth rate of the M2 money supply.
The other? The winning percentage of the old Washington Senators baseball team.