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The Deceptiveness of Data
By InvestingNook  •  January 7, 2015
A simple illustration as to how easily data can be (mis)represented. The table above contains primary data that is typically used for peer/relative valuation purposes. The idea is that by comparing the metrics between companies of the same industry, one can approximate how much a similar company should be worth by applying a similar multiple. An analyst’s job is to find a suitable multiple under this slew of numbers that best fits the industry, but even in the course of such a relatively simple process, there is room for deception and pushing of vested interest. Any high schooler will be to tell you the 3 statistical measures of central value – Mean, Median, Weighted-Average. Unfortunately, we often take for granted that statistics are best applied under the law of large numbers, something that we usually do not have the luxury of when it comes to investment research. The number of ......
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By InvestingNook
As Co-Founder and Fund Manager of Heritage Global Capital Fund, we started InvestingNook as a website dedicated to sharing the knowledge of value investing – allowing our readers achieve an edge over the markets with the knowledge of value investing.
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