The MOST Exciting News You’ll Read Today.. Or Not

There are times when we are right, and then there are times when we have to fess up and say where we went wrong.

This one is kinda embarrassing, since we have been constantly beating the drum based on what turns out to be some really flawed charts.

Fussing up

So, there’s a chart that my Foolish colleague Ser Jing had shared some time back.

I helped him make the chart. It was supposed to show the lack of correlation between Singapore’s annual GDP and the yearly returns of our stock market benchmark, the Strait Times Index (SGX: ^STI).

At least, we thought it would. This is what the original chart looks like:

Singapore's annual GDP growth rate and the Straits Times Index's yearly return

Source: World Bank (for GDP figures); S&P Capital IQ

Well, it turns out that I made a boo-boo on the excel spreadsheet. The chart above was instead supposed to look like the one below:


Source: Author’s imagination

Some would call it a fat-fingered mistake.

But, simply said, I had erroneously entered the amount of yearly rainfall in Singapore instead of the STI’s return in the first chart. My bad.

The new, updated chart shows that the STI is almost perfectly correlated with the movements of Singapore’s GDP. So, the truth is, we have been shooting off our hip based on the wrong chart all this time.

And, those hips can lie. (Someone tell Shakira, please.)

Based on the second updated chart, we need to make amends and take on a new investing tack.

Tap-dancing in the markets

So, let’s start by scratching off that little part where we talk about how investing for the long term is the way to go. (Or, sitting around waiting for the grass to grow.)

The new chart may be instructing us to do something else – to jump in and out of our shares.

The upside – of course – is that we now can have more fun in the stock market, compared to just sitting around doing nothing, which is boring. It’s high time we got off our seats. We can even take our cue from SMRT Corporation Ltd (SGX: S53) and be a Stand-up Stacey.

Better still, we may now try dancing in-and-out of the stock market (instead of just jumping) according to the wimps of the economic and financial stock market news. I mean, I heard on Youtube that Warren Buffett tap dances to work.

Why should only Buffett have all the fun?

Foolish confession

Now, I know these may be a lot of change to take in for one day. So, breathe… let it sink it for a moment… and remember that it is April Fools Day.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.