REFS is
a mine of invaluable information for the private investor.
Selecting shares without its help is like trying to
clap with one hand tied behind your back.
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Logarithmic
scale or 'log scale'
The use of
a log scale offers several statistical and interpretational
advantages over a linear scale. It is employed for two principal
reasons:
First,
it measures vertical movement on a proportional basis; this
ensures that a given percentage movement is always represented
by the same distance on the vertical scale. If, for example,
a share price doubles from 40p to 80p, the vertical movement
is exactly the same if it doubles again to 160p.
Second,
it allows direct comparison to be made between any graphs in
Company REFS which share a common vertical scale factor.
Thus a graph with a scale ranging from 240p down to 60p is comparable
with another ranging from 720p down to 180p. In both cases the
highest price is four times the lowest, implying a height ratio
of 4:1, a scale factor of 4.
A single
common scale accommodating all companies is not used because
it would need to encompass extremes of, say, £25 down to 1p.
This would severely restrict the amount of vertical movement
which most of the graphs could display, greatly diminishing
the visual impact of all but a few graphs.
Company
REFS therefore employs Scale 4 as a standard log scale in
around 70% of the graphs whilst, for the remainder, the log
scale is compressed to accommodate the full range of movement
required.
When
Scale 4 is insufficient to accommodate the extremes of movement,
it is multiplied to the next appropriate higher value (e.g.
Scale 8, Scale 16, Scale 32, etc.), and the value is shown above
the right-hand corner of the graph.
Examples
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