2. Contents
CHAPTER 1 The Basics
Numbers
Data integrity
Data richness
Fonts legibility
Typography in charts
Color basics
Color palettes
Color in charts
Color chart templates
Coloring for the color blind
Color scale application
CHAPTER 2 Chart Smart
Lines
Vertical bars
Horizontal bars
Pies
Tables
Pictograms
Maps
CHAPTER 3 Ready Reference
Do the Math
Mean, median, mode
Standard deviation
Average vs. weighted average
Moving average
Logarithmic scale
Comparable scales
Percentage change
Re-indexing to 100 or 0

3. Percentages
Expressing percentages
Absolute values vs. percentage
changes
Percent of a percentage
Don’t average percentages
Copy Style in Charts
Words
Numerals
Money
Stock indexes
Currencies
CHAPTER 4 Tricky Situations
Missing data
Big numbers, small change
Comparable scales
Coloring with black ink
CHAPTER 5 Charting Your Course
Mapping it out
Before you set out
Staying on track
Managing costs & resources
CHAPTER 6 Know Yourself,
Know Your Numbers
Your investments
Your retirement
Just your luck

4. Pies
Slicing and dicing
Pie charts should not Less effective order
be used to illustrate
It’s intuitive to read top to bottom and clockwise.
complicated
Never chart segments clockwise from smallest to
relationships among
largest. By ordering the slices from smallest to
many segments. It is
largest in clockwise direction or vice versa, the least
easier to compare two
important segment has the most prominent
vertical bars than two
position.
slices in a pie.
Too many slices
It’s difficult to compare and contrast between
many segments. A pie chart shouldn’t have more
than five slices.
If there are more than five, combine the smaller
and less significant segments to create the fifth
slice and label it “Other.” If all segments have to
be represented separately, use a stacked or
segmented bar chart instead. See page 79.

5. Chapter 2 CHART SMART
Larger segments on top The only exception to
the ordering is when all
start here the slices are close in
value. In this case,
start at 12 o’clock on
the right and go
clockwise from largest
to smallest.
2nd
largest
largest
segment 15%
3rd 35%
20%
4th
30%
Just like in bar and line
charts, direct labeling
Reading a pie chart is like reading a clock. It’s helps the reader to
intuitive to start at 12 o’clock and go clockwise. quickly identify
Therefore, it is most effective to place the individual segments
largest segment at 12 o’clock on the right to and focus on the
emphasize its importance. comparison between
them.
The best way to order the rest of the segments
is to place the second biggest slice at 12
o’clock on the left; the rest would follow
counterclockwise. The smallest slice will fall
near the bottom of the chart, in the least
significant position.

6. Horizontal Bars
Ordering and regrouping
Just as in a vertical bar No random lineup
chart, do not use
Don’t plot horizontal bars in a random order.
different shades or 3-D
The main quality of a horizontal bar chart is
rendering in a
the ranking of items by the same attribute.
horizontal bar chart.
Plotting the bars in an arbitrary sequence
defeats the purpose.
Similar to a vertical
multiple-bar chart, a
horizontal multiple-bar
chart should be kept to U.S. 7.1
four or fewer China 9.1
categories. The
shading of the bars Italy 6.1
should be assigned Germany 4.1
from lightest to darkest
so the reader can France 1.1
easily compare and
contrast the data.
Avoid grid lines and scale
Horizontal bars are not as easy to compare as
vertical bars. Using a scale and grid lines
would make it even harder to discern the
relative lengths of the bars. Direct labeling is
cleaner and clearer.
China
U.S.
Italy
Germany
France
0 2 4 6 8 10

7. Chapter 2 CHART SMART
The right order When plotting
horizontal bars over
A horizontal bar chart is most useful when ranking
time, the bars should
the items by the same characteristic, such as
be ordered from the
ranking the countries by sales of a product.
most recent data point
The bars should be ranked from the largest to the and going back in time.
smallest or vice versa. A specific bar can be
highlighted with a different shade. 2010
2009
China 9.1
2008
U.S. 7.1
2007
Italy 6.1 2006
Germany 4.1
France 1.1
For a long list of
horizontal bars, label
the data points flush
right and use thin rules
to separate the bars in
The exception to the rule of ranking by value is
groups of three to five
when a specific order, such as alphabetical order,
to help the readers
is necessary to facilitate easier reading. An
read across.
example would be plotting a chart with 50 states.
A 12.1
Alabama B 11.1
C 10.1
Alaska
D 9.1
Arizona E 8.1
Arkansas F 7.1
G 6.1
California
H 5.1
Colorado I 4.1
Connecticut J 3.1
K 2.1
Delaware L 1.1
.
.
.
Wyoming

8. Fonts
Typography in charts
In charts, typography should not be center stage. The data is
the focus. Type in charts is there to describe the chart
clearly and not to evoke an emotion, as in a fashion
magazine or political poster. Poor typography draws undue
attention away from the underlying data, which carries the
main message. The impulse to use type styles to spice up
the chart should be avoided at all costs. Typography done
right helps present the information in the most efficient and
direct way.
Don’t permit typography Keep the typography
Don’t Do
to oppress the underlying simple. The headline can
data. be either bold or a couple
of sizes larger.
Don’t use all
caps or knock
white type HEADLINE OF THE CHART Headline of the chart
out of black. A brief description that outlines
A brief description that outlines
Don’t use what the data shows what the data shows
bold italic. 8 8
Don’t use
bold for the 6 6
numbers
on the scale. 4 4
2 2
0 0
Don’t set Town A Town B Town C Town D
A
B
C
D
type at an
wn
wn
wn
wn
To
To
To
To
angle.
Alternatively, chart the
data as horizontal bars to
accommodate long names.
Town A 8
Town B 6
Town C 4
Town D 2

9. Chapter 1 BASICS
Don’t use highly stylized Serif and sanserif fonts can
Don’t Do
fonts or turn the type complement each other and add
sideways to save space. variety, and are still highly legible.
Headline of the chart
A brief description that outlines A brief description that outlines
what the data shows what the data shows
Title of
Title of y-axis
y-axis
Title of x-axis Title of x-axis
Don’t knock white type out of Use bold to increase legibility
Don’t Do
black or color. Legibility is on a shaded background or to
compromised. emphasize a segment.
Label B Label B
Label A
Label A
Label C Label C
Label D Label D
Label B
Label A
Label C
Label D
Don’t set a huge amount of text Use bold type to emphasize the
Don’t Do
in bold. Emphasizing everything focal point of the message. Be
means nothing gets emphasized. judicious.
Name Data Data Data Name Data Data Data
Company A 0.0 0.0 0.0 Company A 0.0 0.0 0.0
Company B 0.0 0.0 0.0 Company B 0.0 0.0 0.0
Company C 0.0 0.0 0.0 Company C 0.0 0.0 0.0
Company D 0.0 0.0 0.0 Company D 0.0 0.0 0.0

10. Your Investments
Get rich quick?
What you see may not Arithmetic vs. Geometric rate of return
be what you get. In
many investors reports, Arithmetic rate of return: Simple average of the rate
the returns shown are of return in each year
the arithmetic rate of Geometric rate of return: Compounded rate of
return. In reality, over return of initial investment
the long run investors
are getting the Example
Annual
compounded How well did stock A Year Price rate of return
(geometric) rate of perform? 0 $100
return. 1 150 +50%
2 75 –50
Example 3 90 +20
A hot fund gained 4 72 –20
100% last year. The
following year, an Arithmetic return = Average of annual rates of return
investor puts his money
into the fund but the = (+50% – 50% + 20% – 20%) /4
fund loses 50%. The = 0%
investment report
Geometic return = Annualized appreciation
publicizes a 25% gain,
based on a two-year over four years
average. However, the = 4 72 — 1 = — 7.9 %
investor loses half his 100
money.
This means stock A loses
7.9% per year.
How the math works:
Year Annualized rate Stock value
0 $100
1 — 7.9% 92
2 — 7.9% 85
3 — 7.9% 78
4 — 7.9% 72

11. Chapter 6 K N O W Y O U R S E L F, K N O W Y O U R N U M B E R S
If our funds are compounded at the average annual
rate of return, we will all be rich in no time. For the quants:
Example The difference
Year Return between arithmetic
Imagine an investment
1 –20% return and geometric
of $10,000 growing at 2 +50
a 20% average rate of 3 +100 return is due to the
return. 4 –50 dispersion of annual
Average rate +20% or 0.2 returns.
of return:
Geometric return
Myth It would be a mistake to believe your funds = Arithmetic – Adjustment
return factor
are compounding at 20% a year:
$10,000 x (1 + 0.2)4 = $20,736 where adjustment factor
Reality Your funds compound at 4.7%. Based on =
(Standard deviation)2
of annual returns
the geometric return, the account will be worth only 2
$12,000. Compounding the arithmetic return
The adjustment factor
grossly overstates the growth by more than $8,000. is a numerical
approximation to the
$30,000 Myth exact difference
between the two.
$24,000 Compounded
at average rate:
20,000 $20,736
Reality
10,000 $12,000 Accumulated
value: $12,000
$8,000
0
Year 0 1 2 3 4
What does it mean for you?
For a short-term investment horizon with deposits
and withdrawals during the period, the arithmetic
return is sufficient.
For a long-term investment horizon when returns
are compounded, the geometric return is more
meaningful.