How not to be fooled by a number

Numbers are polite. They won’t tell you when you use them incorrectly. But polite doesn’t mean forgiving. In 2020, a viral tweet in the US claimed that with the $500 million Michael Bloomberg spent on his presidential campaign, he could have given every American $1 million and still had more than $100 million to spare.

The calculation missed the mark by about 650,000%. The real amount every American would have got from Bloomberg: $1.53. India is no stranger to such numerical facepalms. This section is your guide to avoiding them.

100% fall after 100% rise is…not what you may think

• You invest ₹100 in a stock. In the first year, it experiences a 100% rise. Your investment is now worth ₹200.
• In the second year, it suffers a 100% fall. The fall is calculated on the new base of ₹200. A 100% fall of ₹200 is -₹200. You are left with ₹0. You didn’t just return to the start; you lost everything.

Explanation: Percentage changes always depend on the base value from which you start the calculation. A large percentage gain followed by an equally large percentage loss does not bring you back to the starting point because the base for the second calculation has changed.

14 more such tips here