Lately, the stock market climate has been conducive to research new investments. Nothing out there is flying so high that we fall over backwards watching it, to be sure. Other than some mild irritation at being bamboozled by a few corporate executives, most women I've talked to lately are ok with their portfolio choices. When we have time, we still look for solid investments.

No, I don't hang around with Wall St. professionals. The women I talk to are just average folks. These women are teachers, students, retail personnel, some writers, a lot of artist-types, and mothers. None of us are Nobel Prize winners, and most of us experience our fair share of chaos. Our time is limited. If we sneeze wrong, a whole day could be shot.

Corporate executives know this about us. Their marketing teams tell them how busy we are. These marketing teams also have access to math wizards, word masters, and money. The combination of these ingredients can make for a pretty scary stew.

For example: Let's say you find a company that appears to have fairly strong financials. You've been watching this stock for a while (every day while you brush your teeth in front of CNN), and nothing seems abnormal. At work one day, you scan a story in a newspaper found in the break room. The news blurb is about the company you've been investigating. You check the date on the paper to make sure it's not old news, and you read the story again:

Fairy Tale Company Creates New Treatment for Chaos

Somewhere, USA, Right Now - Frankly Benign, spokesperson and CEO for Fairy Tale Company (FATACO), today announced a new treatment for chaos.

"We've tested this treatment," Benign stated, "And it's better than any treatment for chaos on the market today."

This test was recently conducted on 200 women. Ninety-five women were given old treatments for chaos, and 105 women were given the new Fairy Tale treatment for chaos. After four weeks of treatment, Benign introduced the following results at a news conference this morning.

"Among women with mild forms of chaos, 20 received the old treatment, and 85 received the new treatment,"Benign said. "Among the 20 receiving the old treatment, 4 were cured, for a 20% cure rate. Among the 85 receiving our new treatment, 25 were cured, for a cure rate of 29.4%."

Benign continued, "Among women with severe cases of chaos, 75 received the old treatment, and 20 received the new treatment. Among the 75 receiving the old treatment, 35 were cured, for a 46.7% cure rate. Among the 20 receiving our new treatment, 12 were cured for a 60% cure rate."

Benign added, "Obviously our new cure is a landmark achievement for both mild and severe forms of chaos. We're very pleased with the results. Women everywhere should rejoice."

Fairy Tale Company's stock soared this morning on the news. Benign sees no end to the market for this powerful new treatment.

You fly out of the break room and slam into the chair at your computer. You navigate with the speed of a racehorse around that final bend to BUYandHOLD. Fortunately, you already signed up for the new Streaming Stock Portfolio. You have access to up-to-the minute quotes on FATACO in real time.

Sure enough, FATACO has jumped, and so do you. You glance at your stopwatch, and realize you have time to make that trade window at BUYandHOLD. You go for it. Yes! 100 shares of FATACO in record time! You call Fairy Tale Company direct and order a case of this new treatment for yourself.

You shouldn't have bothered. Really. You already got the treatment when you jumped the gun on that stock purchase. Let's slow down and crunch the numbers in that news story again?

The old treatment was given to a total of 95 women. Out of this number, 39 were cured. That's 4 out of 20 with mild forms of chaos, and 35 out of 75 with severe cases of chaos. The overall cure rate was really 39/95, or 41%.

The new treatment was given to a total of 105 women. Out of this number, 37 were cured. That's 25 out of 85 with mild forms of chaos, and 12 out of 20 with severe cases of chaos. The overall cure rate for the new treatment was really 37/105, or 35.2%.

Something look funny? It should. The old treatment for chaos (whatever that is) still works better - overall - than the new treatment.

By the time you figure this out, Fairy Tale stock has packed its bags and gone south. Other folks with more time on their hands knew people would jump on the news story bandwagon. I don't think I need to expound on this scenario. Hopefully, you know by now what happens to pumped-up stocks.

How can this deceitful thing happen, you ask? Well, for one reason, because it can. The logical reason is that the use of statistics based on two unequally numbered comparison groups, rather than statistics based on an overall situation, can often be prettier for sales. Although the company used perfectly legitimate numbers, they've skewed them to their advantage.

How can you stop this from happening to you? When you see figures comparing two groups, especially groups consisting of uneven numbers, slow down. Pull out your trusty calculator and add those groups up. You could save yourself mucho time and money.

This practice happens often, but don't blame the newspaper. Most newspaper offices can make your life look like a vacation on a slow boat to Paradise. In fact, if you call the editor and let them know what you just discovered, they may thank you profusely. You may have given them a great story, lady. That's better than a whole bunch of Fairy Tale.

Until Next Week,
Linda Goin