Thank you to everyone who took the quiz last week, which tested your ability to distinguish between real charts of S&P 500 companies and fake charts generated from a spreadsheet. This quiz was inspired by my guest post on the White Coat Investor blog. As promised, here are the answers of the quiz, and how everyone scored.
Quiz Answers
The quiz was taken by 18 people, although many more read the post but decided not to take the quiz. Here are the answers:
Chart 1
This was a fake chart.
Chart 2
This also was a fake chart generated from my spreadsheet.
Chart 3
Another fake chart.
Chart 4
This is the actual 1-year chart of Exxon Mobil (XOM).
Chart 5
This is the chart of Apple (AAPL). It’s done well in the past year.
Chart 6
This is Bank of America’s (BAC) chart. Note the spike up right after the presidential election.
Chart 7
This is the chart of Target (TGT).
Chart 8
This is a made-up chart.
Chart 9
This is the chart of General Motors (GM).
Chart 10
This chart was fake.
Quiz Results
Eighteen people took the quiz. The average score was 4.94, and the standard deviation was 1.35. Here was the score distribution:
Congratulations to thevaluedoc for getting the top score of eight out of 10. Five readers tied for second with 6 out of 10. I will not mention who got the 2 out of 10.
What do you think? Do you think it is possible to distinguish between real and fake charts?
Congrats, thevaluedoc. This was interesting WSP. As to your question about being able to distinguish the charts, it appears that’s a pretty difficult thing to do if not impossible. Perhaps someone who studies these daily would do much better, but for the average person, it seems to be just another gamble.
It’s definitely not impossible; there were probably some tricks you could use to help distinguish between the two. For example, the dates indicated that we had an overall rising market, so a declining chart would be more likely fake. I didn’t model any gaps or jumps in price; so if a chart had jumps on a roughly 3 month basis (e.g. quarterly earnings reports), it was more likely a real chart.
Valuedoc, any secrets on how you did so well?
It was probably just luck. I did this for fun, so can’t really remember what all of my answers were. I bet if I took it more seriously I would have scored lower. If you picked all fake or all real, you would have 5/10 so a few tells would bump you up a bit. That being said, I did use a few tells: (1) a jump up (or down) around Nov (i.e. Trump bump), I think it gave me 2 or 3 real charts. (2) charts that went up and to the right (I got one real chart right but got tricked on #3, I think), (3) Fake charts that looked like a random dispersion with a few mean reverting events centered around a horizontal line (it may have given me a 1 to 3 fake charts).
I actually don’t study price movements that much. I only look at/understand simplistic technical indicators for the small trading account I have. And, I would bet I have significantly less equity/bond positions compared to most everyone else on here as a relative percentage of financial or total assets. So again probably just luck.
IMHO, all this debate about technical analysis being good or bad doesn’t really matter that much to me. The most important thing to me is controlling risk regardless of whether you are using technical and/or fundamental analysis to decide on investments.
Very nice. I didn’t realize the Trump
bump until I was looking at the real chart of Bank of America.
Congrats to the Value Doc!!!
I personally find that it’s pretty difficult to figure out if it’s a real chart or fake chart. But then again I don’t play as close attention to the market. I normally look every week or two and recently have been on vacation.
So clearly I may need to pay a bit more attention 🙂
It wasn’t supposed to be easy — the average person got around 5 out of 10 right, which is the expected score with random guessing.
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