Monday 9 February 2009

Average is NOT Normal

I found an interesting slide on slideshare. We all normally rely on averages and means to work out whether something is worth the effort or not. But averages are not actually normal phenomenon.

Consider the stock market as an example. For the last 80 years, it has averaged 10% increase. But if you invest your money on that basis, you may not grow by 10%. Why? Check this slideshow out:





It all depends on where you start, where you want to go, and your behaviour / skill.

2 comments:

Carl Richards said...

Abhishek-

Thanks for the kinds words about the presentation, I really value all the feedback this is receiving. Please let me know if you have any questions or comments.

Carl

Abhishek Kumar said...

Carl,

I found your website [http://www.behaviorgap.com] after discovering that slideshow. A nice concept which correlates with a lot of things in life besides investing.

Interesting!