The efficiency of visual communications

Visual Capitalist has this wonderful chart showing the gaps between the stock market returns expected by "investors" compared to "professionals".

It's a model of clarity. The chart form is a dot plot.

The blue dots represent what investors (individuals?) expect to earn from investing in the stock market in the long run. The orange dots represent the professional viewpoint. Each row shows survey results in a different country.

At first glance, U.S. investors are vastly more optimistic than professionals. There is excess enthusiasm in most other countries as well.

The exceptions are Chile, Mexico and Singapore in which the two groups are almost perfectly aligned. The high degree of concordance in these countries makes me wonder if their investors are demographically similar to professionals.

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Those are the first insights one can take from the dot plot, with almost no effort.

But there's more.

The global average is shown in the middle of the chart, allowing readers to compare each country against it. (It's not clear what average this represents though - maybe the average return expected by investors?)

There's more.

The chart shows what's professional about professionals. Not only do professionals hold a much more pessimistic view of stock returns in general, they also exhibit a much lower variance in expectations.

This reflects that professionals adhere to an orthodoxy - they went to the same schools, were taught from the same textbooks, took the same professional exams, and live in their own echo chambers.

Chile, Mexico and Singapore, however, stick out. For a change, the professionals share the enthusiasm of investors.

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This chart shows the power of data visualization. So much information can be conveyed in a small space, if one designs the visual well.

Comments

[Steve MacKenzie]

My only surprise is that they haven't included (with the exception of the US) the actual average investment returns for each country. I think that would be interesting to see how these compare to the expectations of investors & professionals. It seems an obvious addition which might explain some of the anomalies e.g. where expectations are at the lower end, is this supported by actual returns?