Misleading Chart of the Day

The Wall Street Journal has a story entitled "Tech Stocks Get Giddy :)" today – and yes, the smiley is in the headline. It's accompanied by a dreadful chart showing three stocks which are currently at all-time highs: Research in Motion, Apple, and Google. Here's the chart, with Apple removed for clarity's sake:

As you can see, the left-hand chart shows the nominal price of RIMM stock, in Canadian dollars, over the past eight years. The right-hand chart shows the nominal price of GOOG stock, in US dollars, over the past three years. The charts are carefully aligned so that $0 and $100 and $200 are all along the same horizontal line, as though nominal price in Canadian dollars and nominal price in US dollars were really useful metrics. And they certainly make it seem as though GOOG has done vastly better than RIMM.

In fact, GOOG has done better than RIMM, since the Google IPO, although not by an enormous amount: it's gone up from $100.34 to $569, which is an increase of 467%. In the same time, RIMM stock has increased from $22.67 to $96.82, which is an increase of 327%.

Over the past one year or two years, however – and this is something you'd never work out from looking at the chart – RIMM has significantly outperformed GOOG, rather than the other way around. Here's a couple of charts I made myself, rebasing the RIMM share price to the GOOG share price at the time. Over the past 12 months, indeed, GOOG has pretty much gone nowhere in comparison to RIMM:

Which is all to say that if you're going to compare two or three different stocks in the same chart, then you should compare all the stocks in the same chart, rather than trying to compare them across different charts. Otherwise, you can end up giving entirely the wrong impression.