The following appeared in a letter from a firm providing investment advice to a client."Homes in the northeastern United States, where winters are typically cold, have traditionally used oil as their major fuel for heating. Last year that region experienc

The author of the letter advices to the client to invest in the Consolidated industries which deals in the retail sale of home heating oil. Author corroborates his advice with certain evidences such as 90 days of below average temperature last year in the northeastern United States and expected demand of home heating oil in coming years. Author also mentions that many new homes have been built in this region during the past year to imply that the heating oil would be required by all these newly built houses. On a cursory glance, author's suggestions seem valid, however on careful analysis, we find many loopholes in the provided evidences and the suggestion lacks necessary data to convey the suggestion to reader cogently.

First of all, there is no data as to what percentage of homes in northeastern United States use oil for heating. It may be possible that only a small percentage of homes use the traditional oil heating and majority of them have adopted some other home heating technology. Hence, adequate data is required to evaluate this statement.

Second, author mentions that last year the region experienced 90 days of below-average temperature. Again, there is no data which could reflect light on the usage of oil for heating. Was the percentage usage of heating oil increased during these 90 days and if so, then by what amount or percentage it got increased? In the absence of such data, it may be possible that during these 90 days, people shifted to some other place or there was not much increase in the percentage use of oil as not many people use the oil for heating.

Third, author mentions a forecast made by Waymarsh University that this winter pattern would continue for several more years. However, there is no data provided which could support this statement such as reliability of weather forecast of university. It would have been convincing had the author provided a chart of past years temperatures vs university's weather predictions during those years. Also, the weather predictions are not always correct. Just based on the predictions, a big investment decision can't be made.

Fourth, author mentions that during past year many new homes have been built. But he has not provided data which cold corroborate that all or majority of these homes use oil heating. In the absence of such data, it's possible that most of these homes are equipped with latest electric heating technology and no oil based methods used. In such a case, investing on oil based heating would result in a major loss. Hence, data is required which could explain how many of these newly built houses are using oil heating and a survey of people mentioning that they prefer purchasing more oil in the future would fortify the suggestion.

Finally, it may be possible that past year many homes were build because people did not expect sudden plunge in the temperature. Now, looking at the low temperature trends and the forecast made for forthcoming years may make people to stop building new homes. Hence, a survey of the people who are planning to build new homes in coming years is needed. If the people confirm that they are not affected by weather trends and anyway will build houses as per plans, then author's suggestion is valid. However, if it it turns out that people are not not planning for any new houses, then author's suggestion becomes invalid.

Hence, it can be elicited from above analysis that in order to present a cogent suggestion, author needs to provide much more data with real numbers. With the appropriate data, an unbiased evaluation of the suggestion can be done.